Local Initiatives Support Corporation

Charter School Bond Issuance: A Complete History Volume 2

October 2012

Charter School Bond Issuance: A Complete History Volume 2

Written By Elise Balboni Wendy Berry October 2012

Published By The Educational Facilities Financing Center of Local Initiatives Support Corporation www.lisc.org/effc This publication and related resources are available at http://www.lisc.org/effc/bondhistoryv2 LOL CA INITIATIVES SUPPORT CORPORATION EDUT CA IONAL FACILITIES FINANCING CENTER Local Initiatives Support Corporation (LISC) is dedicated to helping community residents transform distressed neighborhoods into healthy and The Educational Facilities Financing Center (EFFC) at LISC supports quality sustainable communities of choice and opportunity — good places to work, public charter schools in distressed neighborhoods. LISC founded the EFFC do business and raise children. LISC mobilizes corporate, government and in 2003 to intensify its national effort in educational facilities financing. philanthropic support to provide local community-based organizations with: The EFFC pools low-interest loan and grant funds and leverages them for investment in charter school facilities in order to create new or renovated ■■ loans, grants and equity investments school facilities for underserved children, families and neighborhoods ■■ local, statewide and national policy support nationally. Since 1997, LISC has invested $127 million in 162 public charter school facilities across the country. The EFFC fosters long-term ■■ technical and management assistance sustainability of the charter sector by identifying replicable financing LISC is a national organization with a community focus. Our program mechanisms and sharing best practices and data through publications such Landscape Charter School Bond Issuance: A Complete staff are based in every city and many of the rural areas where LISC- as the series and History supported community development takes shape. In collaboration with . The EFFC is supported by the Bill & Melinda Gates Foundation, local community groups, LISC staff help identify priorities and challenges, JPMorgan Chase Bank, Prudential Financial, the U.S. Department of delivering the most appropriate support to meet local needs. LISC is Education and the Walton Family Foundation. Building Sustainable Communities by achieving five goals: The EFFC assembled a National Advisory Board to provide oversight ■■ Expanding Investment in Housing and Other Real Estate and leadership of its strategic mission, resource development, public policy activity and other issues relevant to the attainment of its mission. ■■ Increasing Family Income and Wealth The Advisory Board is comprised of representatives of the community development, education, finance and philanthropic communities. ■■ Stimulating Economic Development

■■ Improving Access to Quality Education

■■ Supporting Healthy Environments and Lifestyles

Since 1980, LISC has marshaled $12 billion from thousands of investors, lenders and donors. In urban and rural communities nationwide, LISC has helped to finance the construction or rehabilitation of 289,000 affordable homes and 46 million square feet of retail, community and educational space — totaling $33.9 billion in development. For more information about LISC, visit www.lisc.org. EISFFC ADV ORY BOARD A CKNOWLedGEMENTS JIM GRIFFIN We want to acknowledge the people who contributed to our research for President this study. In particular, we would like to express our gratitude to Professor Colorado League of Charter Schools (Chairman) Chris Armstrong, Assistant Professor of Accounting, The Wharton School, University of Pennsylvania; Tom Kozlik, Janney Montgomery Scott; Yaffa MARGARET ANADU Rattner and Bruce Sorenson, Piper Jaffray and Company; and John Snider, Vice President, Urban Investment Group Megan Wienand and William Wildman, RBC Capital Markets. The Goldman Sachs Group, Inc. We would like to extend special thanks to the Bill & Melinda Gates JOHN KINGHORN Foundation, and in particular Noah Wepman, for support of this research, Vice President but acknowledge that the findings and conclusions presented in this report Prudential Social Investments are those of the authors alone and do not necessarily reflect the opinions of CLAUDIA LIMA the Foundation or the individuals acknowledged above. Executive Director Finally, we would like to thank our EFFC colleagues, Kathy Olsen, Charles Los Angeles LISC Wolfson and Charmian Stewart, for their significant editing and research CARMEN MALDONADO contributions. Northeast Regional Director Canyon-Agassi Charter School Facilities Fund SAMIR K. PATEL Managing Director Tremblant Capital Group MICHAEL RUBINGER President and Chief Executive Officer LISC ANNE STOEHR Program Officer (ex officio) Walton Family Foundation Charter School Bond Issuance: A Complete History Volume 2

Table of Contents

EXECUTIVE SUMMARY 1

METHODOLOGY 5

MARKET OVERVIEW ...... 8 Issuance Status ...... 8 Status by Rating at Issuance ...... 10 Outstanding Charter School Underlying Ratings ...... 12

BEST PRACTICES IN DISCLOSURE 14 Universe 14 Overview ...... 14 Financial Statements ...... 15 School Age ...... 15 Enrollment 15 Waitlist ...... 15 Pro Formas ...... 15 Academic Data ...... 16

CREDIT CHARACTERISTICS AT ISSUANCE ...... 20 Overview ...... 20 School Age ...... 21 Enrollment 22 Waitlist ...... 23 Debt Service Coverage Ratio 24 Debt Burden 25 Rating 26

PRO FORMA ANALYSIS ...... 27 Overview ...... 27 Projected Growth ...... 28 CURRENT FINANCIAL METRICS ...... 29 Universe 29 Accounting Practices 29 Overview ...... 30 Analysis by Bond Rating Status ...... 31 Analysis by State ...... 37 Analysis by Underlying Rating Category ...... 43

COMPARISON ANALYSIS ...... 45 Overview ...... 45 Pro Forma Budget Items 45 Debt Ratios ...... 46

REPAYMENT PERFORMANCE 49 Default Rates ...... 49 Defaults by Issuance Year 49 Defaults by State ...... 50 Credit Characteristics ...... 51 Time Between Issuance & Default 51 Disclosure Comparison ...... 52 Charter Status & Reasons for Default ...... 52 Recovery ...... 53 Non-Monetary Defaults & Other Troubled Credits ...... 54 Review ...... 54

ISSUANCE AND PRICING UPDATE ...... 56 Overview ...... 56 Rating 58 Use of Proceeds 59 Bond Term 60 State ...... 60 Underwriter ...... 62

CONCLUSION 63 A pPENDIX A: Long-Term Bond Rating Scales 64

Appendix B: Charter School Bond Issuance ...... 65

Appendix C: Credit Characteristics at Issuance ...... 90

Appendix D: Current Financial Metrics 94

Appendix E: Defaulted Charter School Bonds ...... 97

Appendix F: Pricing Update ...... 99 Volume 2: togrowscale.Specifically, sector school that willenablethecharter criteria andunderwriting practices consistent andstandardizeddisclosure —toadopt andtheirauthorizers schools municipalities andcharter counsel,conduitissuers,states, andunderwriter’s rating agencies,bond —investors,underwriters, formarketparticipants bepossible should it highlighted inthisreport, With theextensivedataandbestpractices V E X ■■ refunded or have defaulted. refunded orhave been remainoutstanding,have identifies which transactions further and rating,creditenhancementandunderwriter, issuer, jurisdiction, issues,includingdataonparamount, bond tax-exempt school charter fortheexpandeduniverseof583 information Updates basicbond E C 2011 (FY11) asofMay31,2012. andtherepaymentperformanceoftheseborrowers inauditedfinancialstatementsforFiscal asreflected bond-financedschools charter financial strengthof Year atthetimeofissuance, current borrowers school ofcharter thecreditcharacteristics offeringdocuments, bond school providedin charter volume providesextensivedataandanalysisofthedisclosure For thefirsttime,this andthemetricsformeasuringthem. schools andfinancialdriversofcreditstrengthriskfor charter operational Volume forsuch consensusbyexaminingtheacademic, 2ofACompleteHistorystrivestosetthefoundation offerings. bond school forcharter practices improveddisclosure of MunicipalAnalysts’establishmentacommitteetodevelop Federation changes toratingcriteriabyFitch inrecent RatingsaswelltheNational isreflected This uncertainty ofconsensusastothefundamentalmeasurescreditstrength. remainscustomized,withlack these transactions andinvestmentin illustrates,underwriting standards.Asthisreport regarding creditcriteriaandunderwriting marketparticipants thereneedstobegeneralagreementamong market, such ashealthcareorhighereducation, ofthemunicipal sectors toattainascalecomparable tootherspecialized sector school In orderforthecharter 10%.remains below financingneeds marketfortheirpermanentfacility thetax-exempt accessed thathave schools charter 5,600 However,thepercentageofnation’s totalingover$6.4billion. transactions has growntoapproximately600 sector bond school charter ofpost-2010 With theaddition borrowers. thetax-exempt school issuancevolume, investorsandcharter forboth ofprovidinggreatertransparencytothesector analyzed theirpricingwiththegoal bond issuancesthroughyear-end2010 school charter and provided thefirstcomprehensivelistingoftax-exempt In June2011,volume ofCharterSchoolBondIssuance:ACompleteHistory.Volume publishedthefirst LISC 1 UT I E S UMMARY

■■ ■■ ■■ credit characteristics. outstandingissuesandcalculatesmedians forkey approximately 400 atissuancefor Provides creditcharacteristics school analysis ofcharter disclosure. in 15-year forbestpractices andmakesrecommendations history overthesector’s hasevolved issuestodetermineifdisclosure bond outstanding forapproximately400 documents Analyzes thedisclosure ofissuanceand“All-In discount,costs maturities, underwriter’s Cost.” forselect yield, spreadtothetriple-AMunicipalMarketIndex(MMD) 1,2011 January between andMay31,2012, includingcoupon, issued for75Provides andpricinginformation transactions cost 1 Executive Summary 2 Executive Summary Several keyfindingsemergefromtheseanalyses. M I ss ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ar primarily due to a significant decline in the MMD. inthe primarily duetoasignificantdecline months of2012first five despitehigherspreadsforunrated issuance, from7.91%Average declined All-In Costs in 2011 to6.94%inthe (bps). overthe 17-month borrowers school 341basispoints averaging period, widenedtohistorichighsforcharter Spreads tothetriple-AMMD was7.60%. orAll-InCost, cost, borrowing years andtheaverage term was29 offerings totaling$1.14 wereissued;theaverage billion 1,2011 January Between andMay31,2012, 75 bond school charter themarket. accessed have inother jurisdictions schools asmore years,however, in recent Thisof totalparoriginatedinthesector. percentagehasdecreased and Texas for52%ofthenumberissuancesand59% —account Michigan and theDistrictofColumbia,fourstates—Arizona,Colorado, in29states beenissuedforschools have bonds While school charter ratingsbasedontheschool’s areunrated. have creditand48% 39% ratings basedonthestrengthofsomeformcreditenhancement, 13% issuestotaling$5.4billion, outstandingbond have Of the448 matured orbeenrefunded. 69%,has ofthedebtoriginatedinsector’s firstfiveyears, Most defaulted. The defaultedissuesrepresent3%oftotalparoriginated. (refunded), and22,or4%,withoriginalparof$173 have million, eithermaturedorbeenrefunded have million, with atotalparof$862 115, remainoutstanding.Another original parof$5.4billion, or20%, or76%, withatotal 448, Of the583 transactions, school charter transactions. ofdefaulted andcreditcharacteristics and detailsthedisclosure borrowers school Examines therepaymentperformanceofcharter FY11 inordertoassessproformaaccuracy. dataavailable andactual projected performance forasubsetofofferingswithboth FY11Compares keyproformaitemsandmetricswithactual issuance. outstanding bond with schools 300 charter audited financialstatementsforapproximately FY11Calculates mediansfor22differentfinancialmetricsbasedon year proformabudgetsandanalyzesgrowthassumptions. withmulti- offeringdocuments Gathers datafromapproximately300 uan k et c Ov e & er P r vi ici e w n g

U pdate a Be Chara Cred ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ information. containedwaitlist containedproformasandonly59% documents only82%oftheoffering forma budgetsandwaitlistinformation; ofmulti-yearpro withregardtoinclusion There waslessuniformity ontheschool’sinformation ageandenrollment. issuesreviewedincludedfinancialstatementsand outstanding bond fortheapproximately400 alloftheofferingdocuments Virtually the 17-month was$15.2 period million. is$12.1 over size foralloutstandingtransactions theaverage million, The issue trendtowardlargerissuesizealsocontinued.While average originated. oftheparamount 80% high of 73%offerings representing a sector of the number of issues and The trendtowardratedissuancecontinuedin2011 and2012, withrated costs. discountof1.81%includedinthose underwriter’s 17-month 4.67%, ofissuanceaveraged withanaverage costs period, years.Overthe fromprevious percentage ofpar,continuedtodecline discount,measuredasa ofissuanceandunderwriter’s Costs 1.53x, but the debt burden was lower at11.4%.1.53x, butthedebt burdenwaslower wasthesame at forinvestmentgradeschools DSCR Median projected older, 9.0years;larger,713 students;andhadalargerwaitlist,52%. orhigher,was ratingof “BBB-/Baa3” withabond borrower, school investmentgradecharter thetypical asawhole, Compared tothesector revenues) of13.4% inthefifthorfinalyearofprojections. andleaseexpenseasapercentageof median debtburden(debtservice of1.53xanda (DSCR) coverageratio amediandebtservice projected a waitlistrepresenting37% ofitsenrollment.Pro formabudgets open for6.4years,hadanenrollmentof554 studentsandmaintained atthetimeofissuancehadbeen school charter issues, thetypical outstanding Based onmediansforadatasetofapproximately400 and20072010 between recently, 2006 or,more and2012. such as ofgreateraccess, inperiods anddecreasing and2009, 2008 such as difficultmarketperiods, levelsincreasinginmore disclosure with isinverselyrelatedtoeaseofmarketaccess, Academic disclosure comparables. school or neighboring withdistrict,state performance dataonmandatedstateexamstogether ofmultipleyearsschool there hasbeenatrendtowardinclusion performance dataanalyzed, ofacademic Of thetendifferenttypes performancedataprovidedintheofferingdocuments. of academic type both themagnitudeand in therewassignificantvariation however, hasgenerallyimprovedoverthesector’s history; Academic disclosure s t i P t r c t ic e c s t

er i n is Disc t ics lo a s t I ure ss uan c e P Current F ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ro Forma ro Forma coverage ratios in excess of 1.60x. inexcessof1.60x. coverage ratios with greaterthan1.20x,and42%was forschools coverage ratios 70% withdebt service ofoutstanding debtreviewedwasforschools with burdensoflessthan10%.schools 15% recommended wasfor themaximum below benchmark, and39% withdebtburdens ofoutstandingdebt reviewedwasforschools 68% 9.0%. and medianunrestrictedcashasapercentageofdebtoutstandingwas burden of12.7%. incomewas8.6x, Mediannetdebttoavailable of1.41xandadebt coverageratio of debtoutstanding,aservice had$9.2million school charter In termsofdebtmetrics,thetypical days cashonhand. a10.9%and58million, increaseinnetassets,assetsof$860,000 $1 hadnetincomeofalmost school charter overall medians,thetypical netincomefortheyear.Basedon hadpositive schools but fourcharter All despitedifficultfiscalenvironmentsinmanyjurisdictions. condition wereinsoundfinancial schools ofcharter analysis, thevastmajority than70 themore inFY11 variablesemployed Across financial ofoutstandingissues. thenumberandoriginalparamount of both outstandingissuances,representing79% ofthe448 for354 accounted FY11 withavailable financialstatements schools charter The 298 5%and9%. ranged between 4%and7%,medianannualgrowthindebtservice ranged between five years,medianannualgrowthinenrollment,revenueandexpenses ofthree,fouror Basedondifferentproformatimehorizons moderate. growth,itwas proformabudgetsprojected Generally, whilemost five yearsold. than studentsandweremore ormore issuance hadenrollmentsof500 thatat ofoutstandingissuanceisforschools Approximately 60% at 13.9%. 1.52x,whilethemediandebtburdenwashigher asawhole, the sector identicaltothatof waitlist, 23%.Mediandebtcoveragewasvirtually students;andthesmallestmedian medianenrollment,380 the lowest medianage,3.9years; withunratedofferingshadtheyoungest Schools includingunratedofferings. other ratingcategory, andadebtburdenmedianthatwashigherthanofany was lower medianthat the mediandebtburdenwas14.2%, resultinginaDSCR was1.42xand and hadawaitlistof33%.The DSCR medianprojected hadbeenopenfor7.1double-B category, students years,enrolled786 ratinginthe withabond gradeborrower, non-investment The typical i nan A naly ci a s l is M etr ics R Compar ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ epayment for non-investment gradeschools. for non-investment amedianof13.3% having comparedto5.3% investment gradeschools FiscalYearchange innetassets between 2010 (FY10) andFY11, with inthepercentage Theregrade schools. wasalsoalargedisparity medianfornon-investment thandoublethe$800,000 more million, older. The wasjustover$2 medianforinvestmentgradeschools tendtobe thattheseschools thefact reflecting net assets,partially hadhighermedian Despite theirsmallersize,investmentgradeschools investment gradeschools. median enrollmentof1,120 studentscomparedto754 studentsfor hadalarger gradeschools non-investment ratings,although bond non-investment grade with were inbetterfinancialhealththanthose ratings withinvestmentgradebond Within therateduniverse, schools withunrateddebt,13.4%. thantheburdenforschools materially lower $518,000. withrateddebt,10.7%, Mediandebtburdenforschools was withunrateddebt, andahalftimesthemedianforschools two million, withrateddebtwas$1.3 unrated debt.Mediannetassetsforschools with withrateddebtwerestrongerthanthose Medians forschools among the284 unratedissues. among graderatingsand21defaults issueswithnon-investment the 44 withinvestmentgraderatings,onedefault among bonds school charter As ofMay31,2012, defaultsonthe257 monetary therewereno 583 issues. bond inparoriginatedand3.8% intermsofthetotal of thetotal$6.4billion of $173 representinganoveralldefaultrateof2.7%interms million, issueswithoriginalpar defaultsonbond been22monetary There have 12.7% thanprojected, burden wasalsolower comparedto13.4%. debt medianactual however, comparedto1.48x; at issuance,1.39x thanprojected coveragewasslightly lower debtservice Median actual and expensesfallingwithin13%. atissuance,totalrevenueandnetincomefallingwithin10%projections expensefallingwithin1%of with enrollmentanddebtservice Actual FY11 financialmedianswereinlinewithproformaprojections, outstanding debtreviewedinthissection. ofthe forapproximately85% intenstatesaccounted Schools debt perstudentandmedianburden. median debtoutstanding,andtheyalsohadsignificantlyhigher hadhigher non-investment gradeschools theirlargersize, Reflecting is on P er A n f aly orm sis an c e 3 Executive Summary 4 Executive Summary worthy charter school borrowers can access themarketatscaleand canaccess borrowers school charter worthy criteriaso thatcredit- andunderwriting practices appropriate disclosure ofACompleteHistory willhelpbringconsensusregarding volume second We thattheextensivedataandanalysisprovidedinthis arehopeful ratios. satisfactory werefoundtohave highpercentageofschools metrics, anoverwhelmingly Measured byotherkeyfinancial in perpupilfundingmanyjurisdictions. 10.9%, medianincrease in netassetsFY11 andfreezes despitecutbacks median debtburdenof12.7%. hadasurprisinglystrong, schools Moreover, thanexpected of1.41xandalower coverageratio median debtservice withahigherthanexpected togeneralmarketexpectations, superior coverageanddebtburdenratios isevidencedbydebtservice conclusion issound. sector This school ofthe charter the overallfinancialcondition foundthat ofoutstanding issuance,wehave 80% representing almost Based onanalysisofFY11 schools auditedfinancialstatementsfor298 ■■ ■■ ■■ ■■ ■■ irregularities associated withtheoriginalissuance. irregularities associated refundedduetoapproval school’s andpartially wereunwound bonds payments andtheother currentonitsdebtservice isnow one school defaultcases, Intheremainingtwo inthedeclines. contributing factor a possibly cause,withtheschool’s reputation as theprimary academic fourdefaults,or18%, Another academics. enrollment citeddeclining Sixteen, or73% tosubpar ofthe22defaults,werelinkeddirectly issuance. tobond renewalsprior charter oneormore received had tenschools atthetimeofdefaultandanother years orlonger termsofeight wereoperatingunderinitialcharter defaulted schools Eightofthe inthe22defaultedtransactions. or repaymentability quality aconsistentindicatorofacademic renewalwasnot charter terms, inthelengthofinitialcharter tovariability Due partially outstanding mark. pastthefive-year with onlyseven,ortheremaining32%,occurring of 15, withinfiveyearsofissuance, ofthedefaults,occurred or68% withinthreeyearsofissuance.Atotal Nine defaults,or41%,occurred The issuanceanddefaultwas3.9years. mediantimelapsebetween perpupilrevenues. associated ofenrollmentand intheearlyyearsbeforestabilization particularly offundsandhadhigherdebtburdens, at arelativelyhighcost thatborrowed smallerschools tendedtobeyounger, Defaulting schools issues were8.3%and7.4%, respectively. anddefaultratesforunrated issues were0.1%and0.3%,respectively, In termsofparoriginatedandnumberissues,defaultratesforrated begin toaddressthisdeficiency: itemsthatwebelievewill disclosure achecklist ofacademic developed isunique,wehave jurisdiction charter thateach While werecognize been standardized. yet performancedatahasnot ofacademic inputs,disclosure educational curriculumandother philosophy, ofschool provide lengthydescriptions solely thetimehaspassedinwhich offeringdocuments provided. Although thecontentandformofdata inboth thereisgreatvariation however, performance; highlightacademic offeringdocuments Morerecent factor. of,thiskey ameasurefor,anddisclosure to assesscreditstrengthwithout renewal.Itisimpossible drives enrollment,financialstrengthand charter it underwriting; school incharter isafundamentalcreditfactor quality performance.Academic toacademic pertain sector defaults inthecharter of gapandthemajority This revealsthatthegreatestdisclosure report disclosed. alluniversally theyarenot tendtoincludetheseitems,although documents offering performancedata.Morerecent forma budgetsandacademic multi-yearpro age,enrollment,waitlistinformation, statements, school items,including:auditedfinancial meansexhaustive,disclosure no by identifiedsixfundamental,although on affordableterms.We have nation’s system. publiceducation withinthe schools ofcharter commensurate withthegrowingimportance ascale marketachieve ofthetax-exempt sector school can thecharter andasoundinvestment.Onlythen school aquality constitutes both andgreatlyclarifywhat schools component forcharter key underwriting asa evaluateacademics todirectly form willenablemarketparticipants standardized performancedatainamore of improvedacademic Disclosure ■■ ■■ ■■ ■■ valuable underwriting information.) valuable underwriting provide thatdowould forthose ofsuch reports inclusion processes, andrenewal monitoring oftheirongoing aspart reports quality develop allauthorizers not the school’s performance.(Although academic fromtheschool’sIdeally, anevaluativereport regarding authorizer Yearly Progress (AYP) status. oftheschool’sOverarching discussion cardandAdequate statereport District and/orstatecomparables. asappropriate. disaggregated bygradeandsubject School’s performanceonrequiredstateassessmentsformultipleyears, enhancement or some other security pledge in addition totherevenues pledgeinaddition enhancement orsome othersecurity credit this study,an“enhanced”ratingisa rating stemmingfromadditional atissuance andasofMay19,both 2012 of (current).Forthepurposes issue bond “Enhanced” and“unenhanced”ratings areprovidedforeach on issuancestatus. based Analysis” and“CurrentFinancialMetrics.”Issuancesarecolor-coded atIssuance,”“Pro Forma “CreditCharacteristics inDisclosure,” Practices analyses:“Best issuance wasincludedinthedatasetforfollowing ifthe series.AppendixBalsonotes with distinctcreditsforatotalof590 Standard &Poor’s series (S&P).Seven ofthe583 offeringshadtwo bond assigned byFitch Ratings(Fitch), (Moody’s) Moody’s or InvestorsService andanyratings ofcreditenhancement, ifany,leadunderwriter type jurisdiction, issuer, school issuances, includingdateddate,paramount, ofthe583 bond Appendix Bcontainsdataforeach school charter issuance(defaulted). altered theoriginalrepaymenttermsofbond defaultorbeenrestructuredinamannerwhich experienced amonetary either which have which werematuredorrefunded(refunded)andthose which wereoutstanding,those for all583 offerings,includingthose bond andMuniFilings,wedeterminedissuancestatus EMMA Utilizing Bloomberg, Academy Bonds. BondsorQualified Construction Zone Build AmericaBonds,QualifiedSchool such as creditbonds, ofAgricultureguaranteeddebt,ortax Department offerings,such asUnitedStatesThe includefullytaxable datadoesnot offering. foreach series,which isincludedintheparamount taxable ofteninclude asmall These transactions was publishedordisclosed. no officialstatement where including asignificantnumberoftransactions throughMay31,2012, executed facilities school forcharter transactions ofprimarilytax-exempt of publicofferingsandprivateplacements theentireuniverse identifiedvirtually We areconfidentthatwehave fromschools. ratingagenciesanddirectly from underwriters, weobtaineddata Inaddition, bonds. school frequent issuersofcharter andother Authority andCulturalFacilities Educational theColorado County, ofPima Authority from conduitissuers,such astheIndustrialDevelopment websites andgeneralwebsearches. We information alsosoughtborrower Statistics, CenterforEducation ofeducation the National statedepartment Dashboard, AllianceforPublicMuniFilings, theNational Schools Charter L.P.Thompson MunicipalMarketMonitor(TM3),Bloomberg (Bloomberg), (SDC), DataCorporation Securities Municipal MarketAccess(EMMA), Board’s Rulemaking Electronic data sourcesincludedtheMunicipalSecurity widerangingdatasets.Our withthemost issuance,together unrated bond ratedand issuancestodate,includingboth bond school listing ofcharter expansive includesthemost sector, bond school analysis ofthecharter dedicatedtoacomprehensive volumes This oftwo thesecond publication, METHODOLO M ar k et Ov er G vi Y e w offering documents into ten categories andanalyzedthefindings. intotencategories offering documents dataprovidedinthe to assessthedifferences,wedividedacademic type. Inorder indata data,hadsignificantvariation academic in particular, item Onedisclosure whether theywereincludedintheofferingdocuments. data—anddetermined enrollment, waitlist,proformasandacademic age, items—financialstatements,school means exhaustive,disclosure no by credits,weidentifiedsixkey,although school single orjointcharter for offeringdocuments Forthisdatasetofavailable were unavailable. forwhich documents creditandthose school credit (LOC) oranon-charter byeitheraletterof nettingoutissuancesthatweresecured transactions, bond school outstandingcharter over thepast15 ofthe448 yearsfor393 forthesector practices ofdisclosure This analyzestheevolution section are includedinAppendixAforreference. bythethreemajorratingagencies ratingscalesemployed bond long-term oftheissue.The which maybeconsideredaspart of anyothersecurity ratherthanthat school a ratingbasedonthecreditstrengthofcharter itself.An“unenhanced”or“underlying”ratingis school from thecharter was analyzed for the five following variables: was analyzedforthefivefollowing issuance. Data atthetimeofeach haddifferentcharacteristics schools thanoneoffering,andweincluderepeatofferingsasthe hadmore schools others’debt(theywereseverallyliable).Several responsible foreach werenot inmanycasestheschools analysisbecause the disclosure This datasetexcludes14 of orjointofferingsthatwerepart pooled market. throughthetax-exempt thatborrowed schools of thecharter atissuance inordertodeterminethecreditcharacteristics documents dataincludedin379This analyzestheactual section oftheoffering a Be Chara Cred ■■ ■■ ■■ ■■ ■■ “Latest Year” oftheproformas. forthe dividedbyrevenueasprojected Debt Burden: Debtservice Year” oftheproformas. forthe“Latest asprojected dividedbydebtservice for debtservice Netincomeavailable Debt ServiceCoverage Ratio(DSCR): atissuanceasapercentageofenrollment. available period recent Waitlist: Numberofstudentsontheschool’s waitlistforthemost alternate measure,whereunavailable. Enrollment: oran Student headcountatissuance,whereavailable, (assumed asSeptember1stforallissues). thedateddateforofferingandschool’sbetween openingdate School Age:Ageatissuancecalculatedinyearsasthedifference s t i P t r c t ic e c s t

er i n is Disc t ics lo a s t I ure ss uan c e 5 Methodology 6 Methodology analyzed forgrowthassumptions: “Comparison Analysis.”The proformaitemsandmetricswere following toFY11at Issuance”analysis,anddataparticular inthe isemployed inthe“CreditCharacteristics coverage anddebtburdenisemployed (LatestYear). timehorizon had ashorter LatestYear datafordebtservice the firstyear(Year 1)andthefifthorfinalyearofproformasifthey yearsafterthebudgetyear: oftheprojection fortwo Data wascollected 379 atIssuance”analysis. offeringsincludedinthe“CreditCharacteristics fromthe available proformabudgetprojections This analyzes309 section analysis canbefoundinAppendixC. inthe ofthedata,numberdatapointsemployed different sorts Forsubsetsand in theaggregateforrated,unratedandalltransactions. numberofdatapoints.The summarizesthisvariation tableabove varying arebasedona thissection referencedthroughout Medians andaverages P Waitlist Enrollment Age Debt Burden DSCR Variable Chara D Cred ■■ ■■ ■■ ■■ ■■ ■■ ■■ ro Forma ro Forma a Debt service dividedbytotalrevenue. Debt Burden: Debtservice dividedbydebtservice. service for debt Debt ServiceCoverage Ratio:Netincomeavailable expenses. leasesandothercapitallease as wellasfacility andsubordinate, senior interestandprincipalpayments,both Debt Service:Allprojected Net Income:Total revenuelesstotalexpenses. andamortization. depreciation expenses,such as capitalexpendituresandnon-cash debt service, Total Expenses:Projected totaloperatingcashexpenses,excluding Total Projected Revenue: totaloperatingrevenuesfortheschool. alternate measure,whereunavailable. Enrollment: oran Projected studentheadcount,whereavailable, ta i Av t a i la A bi naly c l i t ty er s

is b is y t ae nae All Unrated Rated Var ics 148 143 143 9 185 185 194 194

i a b le 166 166 76 309 309 224 379 379 analysis canbefoundinAppendixD. inthe ofthedata,numberdatapointsemployed and differentsorts with rateddebtand155schools withunrated debt.Forsubsets forschools 143 datapointsforallschools, for of298 of datapoints,withamaximum number arebasedonavarying thissection Medians referencedthroughout aremeaningful. that ourmediansandconclusions standardsand across maybecompared are confidentthattheseschools Bymakingtheseadjustments,we accounting. usinggovernmental schools out principalpaidandcapitaloutlaysfromoperatingexpensesforthose andanalyticalconsistency, includingnetting adjustments fordefinitional numerous necessitated schools bythe298 employed accounting, andenterprise governmental standards, includingboth A mixofaccounting bond sector. school profile ofthe charter asignificantdatasamplethatprovidesvalidoverall schools, by 298 offeringswereundertaken bond these354 borrowers, by thesameschool comprise thedatasetforourfinancialanalysis.Netofmultipleissuances oftheoutstandingissues, thenumberandoriginalparamount of both or79% issuances,totaling$4.26billion, The other schools. remaining354 totheendofFY11that issuedprior forsix andinsufficientinformation currentFY11 therewasno for addition, financialinformation 12 schools newtofileauditedfinancialsfortheyear thatweretoo or schools (13). In offeringsformultiple schools credit(24),andthose credit oranon-charter byeitheraletterof issuesthatweresecured end oftheFY11 bond (39), thatissuedforthefirsttimeafter offeringsforschools including: bond FY11, in tomunicipaldatarepositories financialdisclosure require school fornot bond issuancesthatdid 76 Audited financialswereunavailable Metrics” analysis. inasidebarwithinthe“CurrentFinancial we providebriefdescriptions inthisanalysisarestandard, andmetricsemployed the financialdefinitions school’smetrics indeterminingacharter of most financialstrength. While 22thatwebelievearethekeybalancesheetandoperating we selected than70 themore inourresearch, variablesemployed Across purposes. operatingandbalancesheetmetricsforcomparative medians forvarious aswellformulate sector school ofthe charter the overallfiscalcondition debttodetermine withoutstandingtax-exempt schools statements of298 This analyzestheFiscalYear section 2011 (FY11) auditedfinancial back to net available incomeinthecoveragecalculation. tonetavailable back added i.e.,thesefeesarenot coveragecalculations; indebtservice account takeninto isnot managementorganizations management feesforcharter of inrevenues.Subordination yearsurplusesisreflected ofprior carry-over isincludedinexpenses,andno ordepreciation expenditures, amortization capital asrequiredtoensureconsistency.Forexample,no documents adjustments weremadetotheproformasincludedinoffering single-yearoperatingcashflowitems,and Budget figuresreflect Current F i nan ci a l M etr ics accrued between the dated date and delivery toinvestors. thedateddateanddelivery between accrued at thetimeofissuance,aswelladdinginanyinterestthatmayhave oraddinginanypremiumonthebonds discountonthebonds additional any oftheoffering,subtracting ofissuancefromtheparamount costs discountandother theunderwriter’s value wascomputedbysubtracting thatcomprise theoffering.Thewith individualserialandtermbonds target schedule fortheissueandcouponsassociated principal amortization wascalculatedbasedonthe fortheissue.Debtservice or All-InCost, cost, semi-annual paymentstructures,wecalculatedthetrueborrowing typical available officialstatementsand For fixed-rateissueswithpublicly ofthebonds. calculated asapercentageoftheparamount which were ofissuance (COI), andcost discount(UD) on underwriter’s We alsogathereddata ofthesamematurity. triple-A municipalbonds comparedtothepricingof bond basedonthepricingofthislong MMD, withthespreadtotriple-AMunicipalMarketDataIndex,or together offering, ofeach termbond provide thecouponandyieldforlongest throughyear-end2010 transactions on prior canbefoundinVolume 1.We 1,2011 January offerings issuedbetween andMay31,2012; information for75 andpricinginformation bond weincludecost In thissection, default unlessanduntilthereisamissedpaymenttobondholders. capturedasamonetary may signalaneventualdefault,buttheyarenot ofacharter, ornon-renewal Other defaults,such technical asrevocation information. such asfailuretofiletimelydisclosure repayment ability, defaultmaybeunrelatedto asthereasonfortechnical purposes beconsideredadefaultforouranalytical not on theotherhand,would default, labeleditadefault.Atechnical forbearance agreement,wehave througha termswithbondholders itsdebtservice hasrenegotiated school issuance.Therefore,investors thatwereagreedtoatthetimeofbond ifa 31, 2012, wasunabletomeettheprincipalandinterestpayments borrower, asofMay whose definedadefaultasanytransaction We have andMuniFilings. EMMA inBloomberg, checking formaterialeventnotices bonds by We school identifiedacomprehensivelistofdefaulted charter to assessproformaaccuracy. coverageanddebtburden,arecompared debtservice keydebtratios, two FY11and actual data.The mainproformaoperatingbudget itemsandthe projected offeringsforwhich wehadboth performance forasubsetof85 financial withactual This comparesproformaprojections section I R Compar ss epayment uan c is e and on P er A P n f r aly orm ici sis n an g

U c pdate e efffc/bondhistoryv2. ontheEFFC’s website,http://www.lisc.org/ areavailable from thisreport, withothermaterial spreadsheetsoftheappendices,together Downloadable aggregate forrated,unratedandalltransactions. number ofdatapoints.Theinthe summarizesthisvariation tableabove variable to77. Averages arebasedonavarying referencedinthissection numberofdatapointsforanyindividual profiles, bringingthemaximum Two withdifferentcredit seriesofbonds ofthe75 offeringshadtwo Term All-In Cost Discount(UD) Underwriter’s ofIssuance(COI) Cost (MMD+) Spread toMMD Yield Coupon Variable CI P r i n g

D a ta Av a i la bi ae nae Total Unrated Rated 55 56 56 56 56 56 56 l i ty

b y Var 20 20 20 16 18 19 19 i a b le 75 75 71 76 76 76 74 7 Methodology 8 Market Overview together withabreakdownbyissuancestatus. together year originatedeach bonds school ofcharter total numberandparamount 2012 approximating2011 levels.The tableonthenext page detailsthe through May withvolume million, fellto51 issuestotaling$800 activity in2010 rebounding 2009, with74 offeringstotaling$951 In2011, million. and Issuancefellsharplyduringthecredit crisisin2008 over $1billion. issuancepeakedin2007 bond school with79Charter issuestotalingjust issuance (defaulted). altered theoriginalrepaymenttermsofbond defaultorbeenrestructuredinamannerwhich experienced amonetary size of$7.9 either hereasdefaulted; theyhave arecategorized million, of$173with atotaloriginalparamount issue andanaverage million either maturedorbeenrefunded(refunded).Twenty-two issues,or4%, issuesizeof$7.5 andanaverage million of$862 amount have million, 115,(outstanding). Another or20%of theissuances,withatotalpar issuesizeof$12.1 andanaverage $5.41 billion remainoutstanding million, ofthese583 of three-quarters issues,withatotaloriginalparamount Approximately billion. of$6.44 foraparamount totaled 583, accounting As ofMay31,2012, issues bond school charter thenumberoftax-exempt MAR I ss uan K ET c 1 Defaulted 83 bond offerings had two series with distinct credits for a total of 590 series.Two serieswithdistinctcreditsforatotalof590 oftheseofferingswithmultipleserieshadoneanoutstanding offeringshadtwo 83 bond status andoneserieswitharefundedstatus. Seven ofthe5 e Statu

(22) 4% O V ER VI s E W NUMBER OFISSUES Outstanding (448) 583 76% AGGREG Refunded (115) 20% ATE C 1 HAR TER SCHOOL TER ($ inMillions) refundings. outstandingdebtand11% for54%oftotal sector accounts oftotalsector on theseissuesasofMay31,2012. Par originatedduringthisperiod or3%,ofwhich remainsoutstanding.There$91 million, defaults wereno and2012, 2008 between allbut For theperiod issuancetotaled$2.9billion, defaults. total outstandingissuanceand81%ofsector represents23%oftotalrefundings,42% originated duringthisperiod or5%ofdebtoriginated, has defaulted.Paroutstanding and$140 million, $2.27has beenrefinanced.Alargemajority, or billion, 87%, remains 2003and2007, between period including$195 or8%,that million, wasoriginatedoverthesucceedingfive-year Approximately $2.6billion 2012. outstandingissuanceand19%sector defaultsasofMay31, oftotalsector for67% refundings,4%oftotal accounts oftotalsector during thisperiod or4%,hasdefaulted.Parremains outstandingand$33million, originated 2002, $576 or27%, hasbeenrefunded,$221million, or69%, million, and paroriginatedbetween been refinanced.Ofthe$829million 1998 ofthedebtoriginatedinsector’s firstfiveyearshasmaturedor Most Par Amount BOND Defaulted ($173) 3% ISSU A NCE STATUS PAR AMOUNT Outstanding $6,441 ($5,407) 84% Refunded ($862) 13% 3 2 1 /2012. offeringshadserieswithdifferentissuancestatus. wo 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 Year Total T “Out” meansoutstanding. Data asof5/31 Statu 1 $1,200 s 1000

20 40 60 80 b 0 0 0 0 0 y O 1 r $11 998 igi 448 Out 36 24 41 28 21 24 51 72 13 47 74 nat Outstanding 20 21 8 4 5 0 2 1 $80 999 i on $208 2000 Y euddDfutdTotal Defaulted Refunded e 115 ar Number ofIssues 18 12 12 0 0 7 4 4 2 3 5 7 0 $305 20 ($ inMillions) 01 Refunded $225 20 02 253$,0. 820$7. $6,441.4 $172.6 $862.0 $5,406.7 583 22 0 0 43 5 3 31 26 3 1 0 26 0 0 42 2 33 2 2 2 2 24 0 20 $274 A 03 NNU 20 $327 AL 04 ($ inMillions) ISSU Defaulted 44 59 30 51 79 19 74 4 3 $396 052006 2005 A NCE $571 STATUS $1,037 Out 488$05$21$571.5 $52.1 $50.5 $468.8 802$. 00$800.2 $0.0 $0.0 $800.2 367$39$. $360.5 $0.0 $326.9 $13.9 $12.5 $346.7 $73.6 $240.8 303$. 00$340.3 $0.0 $0.0 $340.3 908$. 00$950.8 $0.0 $0.0 $950.8 2007 484$74$. $555.9 $0.0 $77.4 $478.4 945$49$71$1,036.5 $27.1 $34.9 $974.5 379$39$41$395.9 $34.1 $13.9 $347.9 274$23$40$273.7 $14.0 $22.3 $237.4 8. 154$. $225.5 $9.4 $135.4 $80.6 8. 267$63$304.6 $207.9 $16.3 $2.6 $206.7 $161.7 $81.6 $43.6 1. 6. 46$80.1 $4.6 $60.5 $14.9 00$12$. $11.2 $0.0 $11.2 $0.0 2 $556 0820 20 2009 2008 euddDfutdTotal Defaulted Refunded $361 Par Amount $9 51 10 $800 20 11 $340 20 12 9 Market Overview 12 1000 20 40 60 80 00 0 0 0 0 0 10 Market Overview at issuance,including enhancedratingswhereapplicable. rating graph onthenextpagedepictsstatus ofparoriginatedbybond Theunderlying) andfellinthetriple-B double-Bratingcategories. werebasedontheschool’sremaining two-thirds credit (unenhanced or credit enhancement(enhanced)rather thantheschool’s owncredit.The one-thirdoftheratingsatissuancewere based onthestrengthof Roughly size of$7.2 Two million. aratedandanunratedseries. issueshadboth issue andanaverage billion of$2.06 offerings hadatotalparamount issuesizeof$14.6 The andanaverage million. billion 284unrated $4.38 of ratedofferingshadatotalparamount issued withratings.The 301 thanhalfwere issuances,slightlymore Of the583 bond school charter default statusasofMay31,2012. and2012, 2008 between issuanceshadamonetary For theperiod no at7%forthreedefaultedissues. by2005 for fivedefaultedissues,followed 2003and2007,between hadthehighestdefaultpercentageat9% 2006 by 2001at10% forthreedefaultedissues.Duringthefive-yearperiod percentage ofdefaultedissuesat11% defaultedissues,followed fortwo and2002.hadthehighest between the five-yearperiod 1998 1999 of numberissues,thehighestdefaultpercentagescanbefoundin whereas all51 issuancesoriginatedin2011 areoutstanding.Interms maturedorbeenrefinanced, all fourissuesoriginatedin1998have annually isincludedonthecolumnsforeaseofreference.Forexample, year.The statuseach totalnumberofissuesoriginated by transaction providesthepercentageofissues thegraphabove For greaterclarity, Number ofIssues Statu 1 wo offeringshadserieswithdifferentissuancestatus. wo T 100% s 20 40 60 80

0 b y R 1 998 4 a t i n 1 g 999 19 a t I 2000 631 26 ss uan 20 01 c e 20 33 Outstanding 02 20 30 A 03 NNU 20 AL Number ofIssues 243 42 04 ISSU

052006 2005 Refunded A NCE $1.61 billion, or78%, billion, which$1.61 remainsoutstanding. which hasbeenrefunded,$170 or8%,which hasdefaultedand million, or14%, including$284million, billion, Unrated issuancetotaled$2.06 remainsoutstanding. hasdefaulted,and$615million or90%, million, of$2.6 matured orbeenrefinanced,oneissuewithanoriginalparamount double-B ratedparoriginated,$67 million or10%, million, the $685 has the remainingoutstandingissuestotaling$2.15 inoriginalpar.Of billion Only$175par of$2.33billion. or8%,hasbeenrefinanced,with million, withatotal offeringsfellinthetriple-Bcategory, ofratedbond The majority issueswithanenhancedratingatissuancehasdefaulted. the bond which remains outstanding.Noneof or80%, million, refunded, and$501 with$124had atotalparof$625million, or20%,thathasbeen million, or77%,million, remainsoutstanding.Bondsoriginatedwithan“A” rating ofwhich $56 million or23%,hasbeenrefundedand$184$240 million, thatremainsoutstanding.Double-Aratedissuancetotaled or69%, million, including$156million, or31%,thathasbeenrefundedand$352 million, Triple-A of$508 issuancehadatotaloriginalparamount ratedbond Par Amount STATUS 59 1 2007 944 79 Defaulted 0820 20 2009 2008 26 74 10 20 51 11 20 24 12 10 20 40 60 80 0 0 1 for8%ofoutstanding accounting fairly smallshareofallthreecategories, issues and95% ofdefaultedissues.Double-Bratedissuesrepresenta ofoutstandingissues,52%refunded for45% accounting categories, issuance status unrated issuancesrepresentthelargestshareacross refunded anddefaultedofferingsbyratingatissuance.Ascanbeseen, The depictsthebreakdownofnumberoutstanding, graphbelow Number ofIssues

Five offeringshadserieseitherwithdifferentratings ordifferentissuancestatus. $2,500 2,000 1, 1,000 100% 50 50 20 40 60 80 0 0 0 0 0 AAA/Aaa $508 Unrated Outstanding 20 12 38 39 27 15 8 3 AA/Aa $240 BB/B Outstanding a STATUS BY STATUS BY $625 A Number ofIssues BBB/ ($ inMillions) ING RAT ING RAT Refunded Baa 60 21 Refunded 13 11 6 5 issues and roughly one-quarter ofrefundedissues. issues androughlyone-quarter ratings of“A” for18% orhigheraccount ofthe number ofoutstanding issues, 28%and18%, Issuesoriginatedwithenhanced respectively. largestshareofoutstandingandrefunded forthesecond issuances account issues, 5%ofrefundedissuesanddefaultedissues.Triple-B rated ATISSU ATISSU BBB/ $2,325 1 Baa A A A NCE NCE Defaulted BB/ $685 AA/Aa Ba Defaulted 21 1 AAA/Aaa Unrated $2,0 59 11 Market Overview 250 2000 15 1000 50 10 00 20 40 60 80 0 0 0 0 0 12 Market Overview the rating spectrum, there are currently eight “BBB+” underlyingratings therearecurrentlyeight“BBB+” the ratingspectrum, Onthehigherendof fallinthetriple-Binvestmentgradecategory. 80% margins.Roughly issuance, withslightincreasesonthehighandlow asat thesamegeneraldistribution The currentunderlyingratingshave rating. school’s but37 credit;theremaining252donot, benefitfromanenhanced Currently, 196underlyingratingsbasedonthe oftheissuanceshave bonds. benefitedfromanenhancedratingonthe underlying rating,but35 school’sbased ontheborrowing credit.The remaining242hadno outstandingissuanceshadunderlyingratings ofthe448 At issuance,206 oftheanalysis. current, aspart ratings,eitheratissuanceor ofunderlyingschool integrate discussion Where appropriate,we borrowers. school performance ofthesecharter atissuanceandFY11 creditcharacteristics documents, financial onthisoutstandinguniverse,analyzingthedisclosure wefocus report, issued.Throughoutof issuesand84%theoriginalparamount this andrepresent76%total originalparofjustover$5.4billion, ofthenumber a status.Theseoutstanding withanon-default outstandingissueshave issuesremained ofthe583As ofMay31,2012, bond school charter 448 and R O a ut t i s n t gs 12 13 10 11 20 30 40 50 60 80 90 70 10 0 0 0 0 0 i n g 5 BBB+/ Ch Baa1 8 arter S 38 BBB/ Baa2 c 39 hool COMP 12 BBB-/ 2 Baa3 U A nderly 111 UNDERL RISON 29 OF BB+/ YING Ba1 i n INGS RAT g 24

C

HAR 10 TER SCHOOL TER ATISSU Ba2 BB/ categories are shown hereforgreaterclarity. areshown categories issues.Thethemajorrating the outstandingbond between gradations The illustratestheinitialandcurrentunderlyingratingsfor below chart obtained triple-Bratings. subsequently anunderlyingratingfortheschool initially issuedwithout ratingandthreeweredouble-Bratings.Twoa “BBB-” insuredofferings the program’s ratings,onewas rating.Oftheremainingfourwithdrawn to inaddition tomaintainunderlyingratingsfortheschools not chose administrators program through Colorado’s program; obligation moral thatborrowed wereforschools Eightofthesewithdrawals were withdrawn. grade.Twelve,to non-investment or6%,oftheinitialunderlyingratings downgraded, including11 thatweredowngradedfrominvestmentgrade investment gradetograde.Conversely,18, been or9%,have 13%, beenupgraded,including11 have thatwereupgradedfrombelow thesameratingasattimeofissuance.Twenty-six,currently have or issueswithunderlyingratingsatissuance,148, or72%,Of the206 thedouble-Bcategory. ratedbelow fivetransactions are now there lower endofthespectrum, compared toonlyfiveatissuance.Onthe 8 A 2 NCE BB-/ Ba3 INGS RAT Rating atIssuance AN 1 D CURREN 00 B+/ B1 2 T CCC/Caa or lower 3 Current Rating Withdrawn 12 12 13 10 11 80 90 20 30 40 50 60 70 10 0 0 0 0 0 ratings in the triple-B category account forthelargestshare,$2.55 account ratings inthetriple-Bcategory for$2.16 oforiginalpar.Offeringswithunderlying account or 40% billion, The underlyingratingbasedontheschool’s 252offeringswithno credit atotaloriginalparof$5.41billion. outstandingissueshave The 448 Outstanding IssuancebyCurrentUnderlyingRatings Unrated (252) 56% Number ofIssues 448 OUTSTA BBB/Baa NDING (158) 35% BB/Ba (33) 8% Below BB/Ba 1% (5) ISSUES ($ inMillions) BY UNDERL of thetotal. originalparof$101 double-Bhave underlying ratingsbelow or2% million, or11% million, original parof$601 ofthetotal,andfiveissueswith or47%.billion, have Issuanceswithratingsinthedouble-Bcategory Below BB/Ba YING ($101) 2% SCHOOL ($2,156) Unrated 40% ING RAT PAR AMOUNT ($601) BB/Ba 11% $5,407 BBB/Baa ($2,548) 47% 13 Market Overview 14 Best Practices In Disclosure It should be noted, however, that offering documents for charter school school forcharter thatofferingdocuments however, benoted, It should borrower. school districtratherthanthecharter of creditproviderorschool wasappropriatelybased ontheletter district,wherethedisclosure school credit,such asa byaletterofcredit(LOC)either secured orathird-party theywere atotalof23issuances,or5%,wereexcludedbecause addition, for32,or7%,oftheissues.In wereunavailable documents Disclosure inoriginalparissuance. issuancestotaling$4.9billion bond school charter outstanding ofthe448 or88%, We for393, analyzedofferingdocuments risk. school fundamental driversofcharter creditriskandfailtohighlightthe school helpful inevaluatingcharter particularly not oftencontaininformation offeringdocuments school charter overthesector’s 15-year hadevolved Weif disclosure foundthat history. issuesinordertodetermine bond school outstandingcharter for the448 documents assessment ofrisk.Weananalysisthedisclosure undertook andenableinvestorstomakeaninformed theborrower’s operations about allmaterialfacts These aredesignedtodisclose offeringdocuments andanycreditrating. andsourcesofrepaymentfortheborrowing, security bonds, the thatisbeingfinanced,thestructureandtermof project the theissuer,borrower’s financesandoperations, about information couponrates,yieldsandmaturities.Theamounts, alsocontains document bond terms,includingprincipal andcontainsthefinal sale ofthebonds for solicitinginvestors.The(OS) isprintedafter finalofficialstatement isused officialstatement(POS) Apreliminary bonds. sale oftax-exempt inthe employed andofferingdocument statement, themaindisclosure counseltodrafttheofficial counselandbond underwriter’s an underwriter, with work borrowers school charter issuanceprocess, ofthebond As part B U n E S iv T er

PRA 100% s 20 40 60 80 e 0 C T IC Statements Financial E S I 373 20 N

D ISC LO S School Age 38 URE 9 4 DISCLOSURE noletWaitlist Enrollment 393 OfferingDocuments 393 39 3 Ye s INFORM document containedtheinformation. document whetherthe andforotherswesimplynoted breakdowns ofinformation, itemswedelvedintoadditional issuesanalyzedhere.Forcertain bond and determinedwhethertheywereprovidedintheuniverseof393 offeringdocument bond school beincludedinacharter items thatshould no meansexhaustive,disclosure by although We identifiedsixprimary, analysis. disclosure creditscomprisethedatasetforfollowing charter forsingleandmultiple offeringdocuments 393 the analysis.The available enhancedwithColorado’s pledgeareincludedin bonds obligation moral Ov Multiple er (16) Other 3rdPartyCredit Charter LOC 4% Credit (14) 3% vi 233 16 ATION No e 0 w 1% (7) DISCLOSURE 448 OUTSTA 448 Formas 322 Pr 71 o Available UNIVERSE Not (32) 7% Single CharterCredit NDING (379) 85% — 393 ISSUES —393 Academic ISSUES Data 329 64 10 20 40 60 80 0 0 containing this information. Offering documents should include waitlist should Offering documents containing thisinformation. to2003 prior oftheofferingdocuments withnone waitlist information, contained oftheofferingdocuments items.Only233,or59%, disclosure thanforother ofwaitlistinformation withregardtoinclusion less uniformity uponitswaitlist tomaintainenrollment.There was can draw the school andbecause quality itisanindicatorofacademic because both perspective However, thesizeofaschool’s fromanunderwriting waitlistisimportant variesbasedontheschool’sWaitlist quality frequencyofupdatingitslist. process. aspotthroughthelottery receive butdidnot attend theschool, liketo would oftenmaintain waitlistsforstudentswho schools Charter informative. ismost inproformaprojections performance andemployed inhistoricalfinancial equivalentreflected headcount andthebudgetary of both Generally,inclusion withintherelevantjurisdiction. purposes attendance (ADA)andotherssomealternativemeasureusedforbudget daily detailed, withsomeprovidingstudentheadcount,othersaverage ofenrollmentinformation variedintermsofthetype Offering documents enrollment. onhistoricalandprojected alsocontaininginformation majority withthelarge containedcurrentenrollmentinformation, offering documents variable.Allofthe393 keyunderwriting enrollment dataisanother withperpupilrevenues, aresecured bonds school Given thatcharter alwaysclearlystatedoreasytofind. universal, itwasnot ofagewasfairly While theinclusion wasawarded. or thedatecharter such asyearofincorporation containedrelatedinformation the document school’s ontheborrowing information age,andevenintheseninecases, contained Allbutnineoftheofferingdocuments fundamental information. this without orsoundnessoffinancial position retention ofcharter likelihood progress, achievement investors toassessenrollmenttrends,academic or forunderwriters possible Itisnot oftheofferingdocument. as part A school’s provided ageprovidesthecontextforallotherdisclosure audited financialstatements. includeaminimumofthreeyears should rule, offeringdocuments ratherthanasaseparateappendix.Asgeneral the offeringdocument of cases,summariesofthestatementswereprovidedinbody certain offerings,and,in of yearsfinancialstatementsprovidedvariedbetween The number to2005. smaller numberofoutstandingofferingsissuedprior themuch wereamong halfoftheseomissions andalmost school, charter includeauditedfinancialstatementsforthe didnot offering documents bond offerings.Only20,or5%,ofthe school financial datain charter toincludesuch historical anditisstandardpractice any offeringdocument, A borrower’s auditedfinancialstatementsareafundamentalcomponentof S l Statement F S Wa E i nrollment c nan hool i tl ci i a t Ag e s strategic forward planning and realistic assumption possibilities. planningandrealisticassumption strategic forward of constitutingthe intersection perspective, optimal fromanunderwriting tothebudget year is offivetosevenyearsinaddition A timehorizon orthree-year horizon. the remaining6%containedproformas withatwo- longer and offiveyearsor 31% contained proformaprojections another fouryears, contained proformaswiththebudget yearandanadditional offering documents, ofthe393 half,45% after thebudgetyear.Almost definedasthenumberofyears withthehorizon timehorizons, varying Theconsidered forthesepurposes. proformasthatwereincludedhad which werenot to includethemorincludedonlyoneyearofprojections, and71,322, or82%,containedmulti-yearprojections, 18%, failed offeringdocuments, others.Ofthe 393 coverage anddebtburden,among includingdebtservice utilize proformastocalculatekeyfinancialratios, regardingenrollmentand growth.Underwriters underlying assumptions with operatingrevenueandexpenseitemsonacash basistogether show component. These projections andacriticalunderwriting forschools tool budgetary orproformas,areanimportant Multi-year financialprojections, utilizes itswaitlist. maintainsand ofthemannerinwhich aschool data withadescription P ro Forma transactions inthecontextof22defaulted for ananalysisofrenewalhistory Pleasesee“RepaymentPerformance” offeringdocument. school beincludedinanycharter should thatsuch disclosure recognize we itemsforoutstandingissues,although one ofthedisclosure renewalas examinecharter wedidnot Due tothisvariability, terms: widelydifferinginitialcharter issuance todatehave bond school thanhalfofallcharter formore which account Forexample,thefourstates jurisdictions. termsacross charter inthelengthofinitial duetovariability asawhole for thesector aconsistentindicatorofrepaymentperformance itisnot condition, academic terms ofaschool’s financialand overallorganizational, itemin disclosure While renewalisanimportant charter history. in thenarrativedescribingaschool’s establishmentandoperating andrenewalisusuallyfound authorization ofcharter Discussion ■■ ■■ ■■ ■■ more thanfiveyears. more termofatleastthreebutnot hasaninitialcharter Colorado Texas hasaninitialtermoffiveyears. sevenyears. reviewatleastevery authorizer Michigan termofuptotenyears,with hasaninitial charter fiveyears. review every termof15Arizona hasaninitialcharter years,withauthorizer s 15 Best Practices In Disclosure 16 Best Practices In Disclosure documents intotencategories: documents dataprovidedintheoffering the differences,wedividedacademic incontent.Inordertoassess performance, therewasgreatvariation ofacademic thatcontainedadiscussion theofferingdocuments among inputs.Even curriculumandothereducational philosophy, on educational or 16%, instead onstudentresults,focusing containanyinformation didnot ontheschool’s performance.However,64issuances, information academic issuances,329,or84%,containedsome school outstanding charter ofthe the strengthofaschool’s Alargemajority program. educational studentsdependon toattract renewalandtheability charter since both schools charter isessentialtounderwriting quality Analysis ofacademic dem Ac ■■ ■■ ■■ for two or more years. ormore for two measure, such asCalifornia’s AcademicPerformance Index(API)score, Multi-Year resultsforasinglestate Aggregate School State: years. ormore matterfortwo tests formultiplegradelevelsorsubject Multi-Year resultsinrequiredstate Disaggregate School State: assessing theschool’s performance. academic bytheauthorizer Anevaluativereport Authorizer Report: a Single-Year Disaggregate State Multi-Year Disaggregate State Single-Year Aggregate State Multi-Year Aggregage State Other SchoolsComparable ic No AcademicInformation Other Tests/AYP Results

D District Comparable a State Comparable Authorizer Report ta 05 6 8 21 01 60 393 OfferingDocuments 393 64 ACA DEMIC 00 DA state comparables may only have been provided for the most recent year. recent beenprovidedforthemost state comparablesmayonlyhave butdistrict or school, includedmulti-yearstatedataforthecharter have may single-year andmulti-yearcomparisons.Forinstance,thedocument distinguishbetween thatforcomparableswedidnot benoted It should ■■ ■■ ■■ ■■ ■■ ■■ ■■ No AcademicInformation:resultswereprovided. results forequivalentstatetest. Other Schools Comparable: orcompetingschool Neighboring Comparable:State State resultsforequivalentstatetest. District Comparable: Districtresultsforequivalentstatetest. Yearly Progresscards. (AYP)orgradesonstatereport referenced tests,such asTerraNova, ofAdequate aswelldiscussions Other Tests/AYP norm- resultsfornationally School Results: measure forasingleyear. Single-Year resultsforasinglestate Aggregate School State: matterforasingleyear. state testsformultiplegradelevelsorsubject Single-Year resultsinrequired Disaggregate School State: TA 12 12 5 8 15 02 18 6 00 21 5 223 250 05 01 00 15 02 00 250 categories forsingle-yearandmulti-yearstatedata.Forexample,theeight categories issueswereoriginated.Webond combinedtheaggregateanddisaggregate 1999and2012 between analyze trendsovertheperiod whenthese393 We intofourbroadergroupingsinorderto combinedthetencategories in meetinggoals. performanceorprogress ratherthanactual goals which reflect authorizations, frequently containedlengthyoriginalcharter Instead, thedocuments offeringdocuments. inthe393 evaluative reports therewereonlysixofthese were alsoextremelyinformative;however, andrenewalprocesses, monitoring pursuant totheauthorizer’s ongoing oftheschool’s performance,developed evaluations Authorizer academic due tothebenefitsofstandardizedtestingandmeaningfulbenchmarks. perspective fromanunderwriting interpretable andvaluableinformation withdistrictorstatecomparablesthemost results fortheschool ofmulti-yeardisaggregatestate In general,wefoundthecombination outcomes. student meetingAYPratherthandocumenting onreasonsfornot focused ofAYPstatus,which frequently narrativediscussions number ofshort capturedhereincludedalarge thedisclosure AYP Results;however, wastheOther dataprovidedinthedocuments Tests/ ofacademic category adistrictandstatecomparable.The e.g.,both largest than onecategory, includedmore instances,theofferingdocuments comparable. Incertain for theschool’s resultsinrequiredstatetestsand186 providedadistrict example, 215 includedastatecomparable offeringdocuments ofthe393 For ofthesetencategories. issuesforeach Results weretalliedforall393 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1. 0 999 20001 Single-Year StateData 20 01 Per 20 centage of Offerings with Data Group — 393 OfferingDocuments centage ofOfferingswithDataGroup —393 02 20 03 A Multi-Year StateData NNU 04 AL ACA DEMIC recent years. recent inthethreemost 70% tobetween andthendeclined 80% in 2009 alsopeakedat89% higher percentageofOther Results,butthiscategory years.The recent includea offeringdocuments overthethreemost 45% toapproximately in 2009 fromahighof69% datahasdeclined superior than single-yeardata,thepercentageofofferingswhich includethis While itappearsthatthetrendistoincludemulti-yearrather conditions. marketduetoeconomic thetax-exempt toaccess schools for charter difficultyears most thetwo and single-yearstatedatapeakingin2008, ofmulti-yearstatedatapeakingin2009 withinclusion same timehorizon, scores, foreitherasingleyearormultipleyears,hasfluctuatedoverthe and risingto92%in2012. ofaschool’s However,disclosure statetest roughly70% 2004and2011 between ofcomparables,averaging inclusion performance.Post-2002, therehasbeenfairlyconsistent academic regarding before2002includeddisclosure None oftheofferingdocuments groupings. withinthesefourbroad yearthatcontaineddisclosure of offeringseach form theOther Resultsgroup.The illustratesthepercentage graphbelow Lastly, wecombinedtheOther Tests/AYP to Report ResultswithAuthorizer we countedthethreecomparablesasoneundergroupingComparables. comparables, For example,ifoneissuehadstate,districtandotherschool forthisgroup. categories adjustingfordouble-countingbetween categories, into onegrouping,Single-Year Data.We similarlycombinedthecomparable with the125 datapointsfortheSingle-Year DisaggregateState category data pointsfortheSingle-Year werecombined AggregateState category 2006200520 DA 2007 TA Comparables 20092008 20 Other Results 10 20 11 20 12 17 Best Practices In Disclosure 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1. 0 18 Best Practices In Disclosure issues was3.53,andthemedian4.00. forall393 The information. average issuances hadzeroorlittleacademic andfour,slightlylessthanone-thirdofall two ranging between withametric disclosure academic tomoderate thirdhadlow Another fiveandseven. metric,withmetricsrangingbetween minimum academic thanone-thirdmetthe issuances mettheidealmetric.Slightlymore school graph,only2%ofcharter As illustratedbytheaccompanying the school’s performance. academic regarding ifavailable, fromtheauthorizer, withanevaluativereport together and adistrictorstatecomparable.The idealscorerepresentstheseitems oftheschool’soverarching discussion cardandAYPstatus, statereport onrequiredstateexams,some year disaggregateresultsfortheschool ofmulti- our weightingsystem,theminimumscorerepresentsinclusion metric scoreoffiveandanidealeightorhigher.Given aminimum have should standpoint,webelieveofferingdocuments practice 0and10offering thatrangedbetween issues.From abest forthe393 metricforeach anacademic individual datacomponents,wedeveloped asinglepoint.Usingtheseweightsforthe wereawarded categories State andSingle-Year DisaggregateState The categories. remaining their weight.We alsodoubledtheweightforMulti-Year Aggregate Multi-Year informative,wetripled DisaggregateState themost categories and Report Forexample,sincewefoundtheAuthorizer quality. school intermsofevaluating perspective isfromanunderwriting informative each basedonourviewofhow dataforthetencategories We weightedtheraw Academic Metric State Comparable District Comparable Other Tests/AYP Results Single-Year AggregateState Single-Year DisaggregateState Multi-Year AggregateState Multi-Year DisaggregateState Report Authorizer Academic Data O dem WeightingData A ther Schools Comparable ther Schools C A IC

METR IC Weight 1 1 1 1 2 2 3 3 1 public schools. forthenation’s available datanow oftheextensiveacademic interpretation inthe expert willexpandtheuniverseofmarketparticipants volume andincreased ofgreaterdatauniformity lifecycle,thecombination charter oratdifferentpointsinthe indifferentjurisdictions will differforschools increasinglyadeptatevaluatingresults.While suchbecome evaluations will standardized,marketparticipants becomes form. Asdisclosure standardized inmore information providing investorswithkeyunderwriting by contributegreatlytothesector’s development would market conditions, consistently,regardlessof practices disclosure Improving academic metricfellto4.13academic 4.00in2011 andremainedbelow and2012. in2010, schools easedsomewhatforcharter market access theaverage When in2009. metricrisingto4.13 andthento4.44 the average in2008 improved,with disclosure ofacademic thequality and2009, crisis in2008 to3.47 to3.37 andfellfurther in 2005 in2006, in2007. Duringthecredit fromahighof4.10 metricdecreased academic years,theaverage In those and2007. easierin2006 became untilmarketaccess disclosure academic and 2012. Asseeninthegraphonnextpage,therewasimproved 2002 between fortheperiod therefore, weonlyincludedannualaverages to2002; ofoutcomesratherthaninputsprior in termsofadiscussion disclosure academic therewasno above, improving. Asmentioned hasbeen disclosure ofacademic in ordertodetermineifthequality year weightedmetricfortheofferingseach We calculatedtheaverage dem A 5 –7 C 35% A 3 93 Offering Documents IC METR 8 –10 2% IC 2 –4 35% D IS 16% T 0 R IB UT 12% I 1 ON prematurely orinappropriately. beenbroughttomarket astheymayhave such characteristics, offeringswith avoid themarketandinvestorsshould accessing refrain from oftheseredflagsshould oneormore that have Schools offeringdocuments. we gleanedfromreviewofthe393 listof“redflags” that analysis,weprovidethefollowing disclosure this throughout recommendations tootherbestpractice In addition ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Conflicts ofinterest turnover Significant teacher Frequent inprincipaland/orotherleadershippositions turnover ingradesserved reduction Recent enrollment Declining renewalduringprocess Limited ratherthanfullcharter 2.50 3.50 4.50 0.50 2.00 3.00 4.00 5.00 0.00 1. 1.00 50 20 0.83 02 20 3.31 03 20 3.63 04 052006 2005 4.10 AV ER AGE A AGE 3.47 393 OfferingDocuments 393 NNU AL 2007 3.37 ACA DEMIC 0820 20 2009 2008 4.13 ME TRIC 4.44 4.13 10 20 3.58 11 20 3.92 12 19 Best Practices In Disclosure 0.0 0.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 1. 1. 0 5 20 Credit Characteristics At Issuance variables: inoriginalparissuanceforthefollowing billion offerings totaling$4.69 theresults.Wedistorted analyzeddatafortheremaining379 outstanding have would oftheirlargercombinedcharacteristics liable) andinclusion others’debt(theywereseverally responsibleforeach werenot the schools inmanycases analysis,because ofthedisclosure credits, which werepart The universeforthiscreditanalysisexcludes14 orjoint offeringsforpooled issuance. atthetimeofeach haddifferentcharacteristics as theschools thanoneoffering,andweincluderepeatofferings hadmore Several schools translatedintounderlyingcreditratingsfortheschools. characteristics these marketandhow throughthetax-exempt thatborrowed schools atissuanceofthecharter understanding ofthecreditcharacteristics aclearer datainordertodevelop weanalyzetheactual this section, credits.In outstandingsingleormultiplecharter a universeof393 for determined whethertheywereincludedintheofferingdocuments itemsand analysis,weidentifiedsixkeydisclosure In thedisclosure C Ov Debt Burden DSCR # ofIssues Waitlist Enrollment Age Par Millions n M ■■ ■■ ■■ ■■ ■■ RED Latest Year. forthe dividedbyrevenueasprojected Debt Burden: Debtservice fortheLatestYear. asprojected dividedbydebtservice service fordebt Debt ServiceCoverage Ratio:Netincomeavailable atissuance asapercentageofenrollment. available period recent Waitlist: Numberofstudentsontheschool’s waitlistforthemost alternate measure,whereunavailable. Enrollment: oran Student headcountatissuance,whereavailable, (assumed asSeptember1stforallissues). thedateddateforofferingandschool’sbetween openingdate School Age:Ageatissuancecalculatedinyearsasthedifference ed er i vi a I T e C w s

HARA b y In v C e T s t ER ment Grade Cate IS T aaStIvsmn rd o-netetGaeUnrated Non-InvestmentGrade InvestmentGrade Set Data ICS 309 309 224 379 379 379 Na

AT IS S UAN g ory C $2,529.9 11.4% E 52% 1.53 713 155 9.0 be foundinAppendixC. can thenumberofdatapointsemployed which follow, median calculations ofthedataincludedin intheaggregate.Fordifferentsorts variation tablesummarizesthis numberofdatapoints.The accompanying varying arebasedona thissection referencedthroughout Medians andaverages andthesmallestmedianwaitlist, 23%. enrollment, 380; median medianage,3.9years;thelowest withtheyoungest for schools includingunratedofferings.Unratedofferingswere other ratingcategory, andadebtburdenmedianthatwashigherthanofany was lower medianthat the mediandebtburdenwas14.2%, resultinginaDSCR gradecreditswas1.42x,and fornon-investment DSCR median projected studentsandamedianwaitlistof33%.Thea medianenrollmentof786 withamedianageof7.1investment gradeofferingswereforschools years, at11.4%. butthedebtburdenwaslower asawhole, the sector Non- wasthesameasfor forinvestmentgradeschools DSCR Median projected be older,9.0years;larger,713 largerwaitlists,52%. students;andhave was 13.4%. thattendedto Investmentgradeofferingswereforschools debtburden was1.53x,andthemedianprojected DSCR median projected median enrollmentof554 studentsandamedianwaitlistof37%. The The 379 withamedianageof6.4years, offeringswereforschools but onewereratedbasedoninsuranceoraletterofcredit. all oftheunratedofferingsbecause weretalliedaspart offering. These 35 hadanenhancedratingforthebond an underlyingratingfortheschool, not have oftheofferings,which did Thirty-five in thedouble-Bcategory. investmentgrade fellbelow and39 within theinvestmentgradecategory withunderlyingratings,194.those Within theratedofferings, 155 fell underlyingratingbasedontheschool’s withno credit,185,those and grade andunrated.The offeringswerefairlyevenlydividedbetween atissuance:investmentgrade,non-investment by majorratingcategory credits ofthefivevariablesaswellmediansforunderlyingschool each The summarizesthemedianresultsfor379 tablebelow offeringsfor $632.2 14.2% 33% 1.42 786 7.1 39 $1,524.4 13.9% 23% 1.52 380 185 3.9 $4,686.5 13.4% 37% 1.53 554 379 6.4 All its authorizer. renewaloraninterimreviewby acharter performance, andperhapsreceive academic of record atrack financial andoperatingsystems,develop phase,institutionalize hashadtimetoweathertheinitialstart-up the school because isconsideredastrengthfromcreditperspective maturity School ornetwork. organization bytheparent secured thatwerenot butwhich issuedbonds networks, ofcharter thatwerepart wereforschools offerings forbrandnewschools not yetopened. were intheirfirstyearand4%thathad ofthe Two-thirds that oneandthreeyearsold,2%forschools thatwerebetween for schools five yearsold. including The remaining20%werefornewerschools, 14% time ofissuance,and16% threeand thatwerebetween wereforschools 379 thanfiveyearsoldatthe thatweremore issues,64%wereforschools agewas6.9years.Ofthe age atissuancewas6.4years,andtheaverage For the379 offerings,themedianschool bond school outstandingcharter S 0 –1.0 Pre-opening All >10 Years 7.6 –10.0 5.1 –7.5 4.1 –5.0 3.1 –4.0 2.1 –3.0 1.1 –2.0 g fIse Par Millions #ofIssues Age I c ss hool meaningful comparisons difficult. If more standardized academic data disclosure becomes the norm, such analysiswillbegreatlyfacilitated. the becomes academic datadisclosure more standardized meaningful comparisonsdifficult.If provided,which makes ofinformation inthetype data,primarilyduetothelargevariability toanalyzetheacademic analysis. We not alsochose FY11. availablefor auditedfinancialstatements Pleasesee“CurrentFinancialMetrics”forthat recent most inthe asreflected schools of charter onthecurrentfinancialstrength insteadtofocus choosing We oftheofferingdocuments, analyzethefinancialstatementsincludedaspart didnot also provideabetterideaofanticipateddebtcoverageandburdenattheschool’s revenues. steadystatewithfullenrollmentandassociated Yearcalculated, because stillgrowingatissuance,Latest ofcapitalizedinterest.Forschools 1dataincludedsignificantamounts Year projections tocomparetheLatestYearlease expenses.Forthiscreditanalysis,wechose ratherthanYear coverageandburdenratios which wealso 1ratios, leasesandothercapital aswellfacility andsubordinate, expense,senior isdefinedtoincludealldebtservice thatdebtservice however, note, here.We employed should derivativeratios Please referto“Prooftheproformaresultsandtwo detaileddiscussion FormaAnalysis”foramore uan c Ag e & Cred e 7 466541% $4,686.5 379 36 4$1. %4 6 2 6 .915.6% 1.49 36% 420 63% 96% $1,613.0 54% 4% 93 0% $282.9 0% $188.1 26 $218.0 29 24 73 15 74 7. %0 100% 0% 0% $77.5 9 i t Chara 89144% $849.1 1110 %10 a17 15.2% 1.72 Na 0 100% 0% 0% $161.1 89854% $819.8 4692%8 4 8 3 .714.5% 1.57 33% 484 64% 8% 28% $476.9 c t er is Investment t Grade % ics

b y S c Investment rd nae noletWaitlist Enrollment Unrated % Grade % hool Non- 10% 10% 10% 15% 12% 12% Ag e 9 5 7 .313.4% 1.53 37% 554 49% 35% 90% 4 2 6 .711.6% 1.57 36% 626 34% 41% 27% NUMBER Pre-opening >10.0 25% 390 595 554 726 377 4% 5.1 –10.0 OF 39% ISSUES 9 .713.9% 1.57 49% 2 .716.5% 1.57 62% 1 .512.8% 1.65 13.8% 31% 13.6% 1.38 1.54 32% 23% BY SCHOOL DSCR 1.1 –3.0 14% 0 –1.0 AGE 2% 3.1 –5.0 16% Debt Burden 21 Credit Characteristics At Issuance 22 Credit Characteristics At Issuance the offerings were for new schools and 2% were for larger charter networks networks and2%wereforlargercharter the offeringswerefornewschools for10% studentsaccounted 250 oftheofferings.Onextremes,4% oflessthan Smallorgrowing schools school. charter stand-alone typical students,therangefora and499 250 withenrollmentsbetween schools atissuance,and28%werefor studentsormore with enrollmentsof500 the 379 offerings,58% bond wereforschools school outstandingcharter 379 was907 offeringswas554 students.Of students,andtheaverage The representedinthe medianenrollmentatissuancefortheschools maturity. with school trendline agenerallydecreasing ofdebtburdenshow forma projections thehighestmedianat1.72x. having Ontheotherhand,pro newest schools withthe appearrelatedtotheageofschool, coveragedonot service ofdebt forfiveofthenineagecategories. Pro formaprojections and 36% 31% tenyearsorolder.Medianwaitlistpercentagesfallbetween schools to studentsforfirst-yearschools 726 studentsfor up fromamedianof390 age,risingafterstart- Median enrollmentatissuanceincreaseswithschool perse. time ofissuancethantheageschool ratedandunratedofferingsatthe ofthepricingspreadbetween a function groups. The graderatingmaybemore toobtainanon-investment choice 8%and15% year,rangingbetween after theirsecond forthedifferentage graderatingsisfairlyconsistentforschools percentage ofnon-investment unrated basiscomparedtoonly27% tenyearsorolder.The ofschools eitherbeforeopeningorduringtheirfirstyearoptedtoissueonan bonds thatissued mature;all24schools asschools unrated offeringsdecreases beenassignedinvestment-graderatings.The percentageof older have fouryearsor ofofferingsforschools to60% 40% at issuance.Roughly increaseswiththeageofschool the triple-Binvestmentgradecategory thepercentageofofferingswithunderlyingratingsin beexpected, As would E 1,500 –2,499 1,500 1,000 –1,499 750 – 999 –749500 –499 250 <250 New School All >5,000 –4,999 2,500 nolet#o susPar Millions #ofIssues Enrollment I nrollment ss uan c e & Cred 7 466541% $4,686.5 379 106 45 45 40 95 13 15 12 30610 %0 10.5 0% 0% 100% $360.6 8 i t Chara 3146%23% 62% $381.4 5548%8 %11.2 8% 8% 83% $595.4 6274%2%31% 24% 44% $622.7 72362% $762.3 1875 %9%584%16 13.8% 1.60 41% 5.8 90% 5% 5% $188.7 1110 %10 05N .213.2% 1.72 Na -0.5 100% 0% 0% $161.1 7182%8 5 4.9 65% 8% 26% $741.8 8265%8 8 . 5 .313.5% 1.53 35% 6.8 38% 8% 54% $872.6 c t er is Investment t Grade % ics

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E nrollment Investment rd nae g Waitlist Age Unrated % Grade % Non- 10% 11% offerings for schools of 1,000 students or more wereassignedinvestment of1,000studentsormore offerings forschools 62%and100%ratings increaseswithenrollmentsize.Between ofthe age,thepercentageofofferingswithinvestmentgrade As withschool otherriskfactors. canface program oftheiracademic ratherthaninresponseto thelogic to payfortheirfacility which growenrollmentinorder cuts.Ontheotherhand,schools budgetary students or lost inrevenuesstemmingfrom to withstandfluctuations tendtobebetterable alwaysbetter.Largerstudentbodies bigger isnot Larger enrollmentsaregenerallyconsideredacreditstrength,although case andfrom12,000 to20,000studentsinanother. studentsinone to9,300 enrollment atthetimeofissuancefrom5,500 and2012 thatincreased 2009 repeat offeringsbetween networks fortwo issuersincludesseveral ofnetwork thatthislastcategory benoted should basis.It onarecourse studentsthatissuedbonds with 5,000ormore 9 . 7 .313.4% 1.53 37% 6.4 49% 27% 15% 750 –1,499 24% NUMBER 5,000+ 2% 123%15 9.3% 1.58 35% 11.2 7.8 7.1 1,500 –4,999 500 –749 OF 7% 25% ISSUES 130% 4 .812.8% 13.4% 1.48 1.47 34% 29% 75% 37% BY ENROLLMEN <250 10% DSCR .09.7% 1.40 .812.0% 1.68 .313.7% 1.53 New School 250 –499 4% 28% T Debt Burden or more oftheirenrollmentatissuance,11%or more withwaitlists wereforschools 12%information, thatmaintainedwaitlistsequaling100% wereforschools the disclose maintainawaitlistordidnot thateitherdidnot for schools Of the379 issuances,155, bond school outstandingcharter or41%,were 12% forthelargestschools. 10% students,butfalltobetween with enrollmentsoffewerthan1,500 and Projected 13% debtburdenmediansrangebetween and14% forschools and1.72x, discernible trendline. 1.40x butwithno rangebetween ratios coverage 75% largestgroupings.Medianprojected and130% forthetwo butjumpsto enrollmentcategories, formost to40% percentage is35% orhigher.The medianwaitlist withenrollmentsof1,500 for schools students.The medianageisroughly11 and1,499 500 years between withenrollmentsranging sevenandeightyearsforschools between Median ageatissuancegenerallyincreaseswithenrollment,equaling asawhole. category median ageof7.3 yearscomparedtoamedianageof4.9forthe asindicatedbya schools tendedtobeestablishedstand-alone schools were assignedinvestmentgraderatings.These smallerinvestmentgrade range 250-499 withinthismoderate that26%oftheschools It isnotable studentswereassignedarating. and499 250 with enrollmentsbetween oftheofferingsforschools students wereassignedarating,andonly35% only 10% withenrollmentsoffewerthan250 oftheofferingsforschools wererated; likely toobtainarating.Noneoftheofferingsfornewschools studentswereless withenrollmentsoffewerthan500 24%. Schools ratings varieswithlessofadiscernibletrendline,rangingfrom0%to grade ratings.The grade percentageofofferingswithnon-investment S Wa 1 0 0$6. 0 35% $470.5 $334.0 50% All 28 Na $269.8 >200% 22 101% –200% 76% –100% 20 51% –75% 41% –50% 31% –40% 21% –30% Par Millions #ofIssues 11% –20% 0% –10% Waitlist I ss i tl uan i c t e & Cred 7 466541% $4,686.5 379 155 30 35 35 18 18 18 i t Chara 15862%4% 26% $1,578.6 35231% $395.2 $414.6 4608%6 %6.9 6% 6% 89% $416.0 39% $154.5 $476.1 $177.2 c t er is Investment t Grade % ics 51% 78% 55% 57% 37%

b y Wa Investment rd nae g Enrollment Age Unrated % Grade % i Non- 10% t 14% 18% 1 11% 11% 17% 17% %3%646116 14.0% 1.64 601 6.4 36% 9% %4%8.0 40% 9% l is t per pupilrevenue. fromitswaitlist to maintainenrollmentand todraw reason, ithastheability studentsforany lose aschool should Equallyimportant, quality. academic the school’s oftheschool’s anddemand,generallyreflective reputation itisindicativeof isconsideredacreditstrengthbecause the studentbody, A largenumberofwaitlistedstudents,representingahighpercentage was68%. average thedatawas37%, issuanceswhich disclosed outstanding bond andthe waitlist ranges.The medianwaitlistpercentageatissuanceforthe224 the0%-10%,offerings fellfairlyequallybetween 11%-20% and21%-30% ofenrollment.The remaining26%of 31%and50% waitlists ofbetween 51%of between and100% ofenrollmentand10% with wereforschools 9 . 5 .313.4% 1.53 554 6.4 49% 44% 5 . 4 .912.1% 1.59 945 8.8 25% 4 9.3 54% 70% 47% 15% Not Disclosed 41% NUMBER 8.2 5.0 6.9 7.4 7.8 0% –10% OF 9% ISSUES 445 488 650 635 657 552 411 773 11% –20% BY 9% >100% 12% WAITL 21% –30% DSCR 51% –100% .913.9% 1.39 .815.8% 1.38 .313.2% 1.53 .214.0% 1.52 .512.8% 1.95 .610.9% 1.56 .613.2% 1.56 .713.7% 1.47 8% 31% –50% 11% IS 10% T Debt Burden 23 Credit Characteristics At Issuance 24 Credit Characteristics At Issuance increases with higher projected ratios, rangingfrom0%forofferings ratios, increases withhigherprojected thepercentageofinvestmentgradeofferingsgenerally As expected, thebetter. coverage,thehigherratio year. Fordebtservice paymentforthe hasexcessfundsequaltohalfofitsdebtservice school meansthe of1.50x adollarofexcessfunds,whileratio butnot service, fundstopayitsoperatingexpensesanddebt enough hasprecisely school of1.00xmeansthatthe pays foroperatingexpenses.Forexample,aDSCR hastomeetitsprincipalandinterestpaymentsafterit aborrower cushion, much netrevenue,or measureshow coverageratio The debtservice was1.69x. offerings withproformaswas1.53x,andtheaverage forthe309 coverage oflessthan1.20x.The DSCR medianprojected Theand 15% of2.00xandabove. remaining7%projected ratios projected and1.99x 1.40x 37% rangingbetween 1.20x and1.39x, ratios projected between coverageratios 23%projected pro formabudgetprojections, Of the379 issuances,19% bond school outstandingcharter contain didnot categories. forthehigherpercentagewaitlist and debtburdenmediansgenerallylower mediansgenerallyhigher towaitlistaswell,withDSCR arelation to have appear both a higherpercentageofunratedofferings.The proformaratios tendingtohave waitlistcategories investment graderatingsandthelower ahigherpercentageof withhigherwaitlistsgenerallyhaving categories relatedtothepercentageofinvestmentgraderatings,withthose positively ageorsize.However,itdoesappeartobe to berelatedeitherschool Perhaps appear ofthesmallerdataset,waitliststrengthdoesnot because IC Ser D .0 .9 1$8. 4 %3%6.1 39% 7% 54% $589.8 All 41 No Pro Formas 3.00x+ 2.00x –2.99x –1.99x 1.60x .0 .9 4$0. 21% $309.8 24 –1.59x 1.40x 1.20x –1.39x 1.00x –1.19x <1.00x DSCR I e ss b t uan c e & Cred v e Co fIse Par Millions # ofIssues 7 466541% $4,686.5 379 66 86 70 15 74 1. %0 0%4.5 100% 0% 0% $19.5 3 v i er t Chara a g e 125738% $1,215.7 R 81263% $821.2 66224% $656.2 17233% $157.2 9714%8 50% 8% 42% $917.1 a c t t er i o is Investment t Grade % ics

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D Investment SC rd nae g noletWils DebtBurden Waitlist Enrollment Age Unrated % Grade % Non- 10% R 13% 13% 13% 10% 11% increases. ascoverage coverage,withdebtburdendecreasing related todebtservice 7%and13%.between Debtburdenistheonlyvariablethatappears rangesroughly graderatingsforthedifferentcategories non-investment orinvestors.The percentageof byunderwriters considered lessimportant was signifying perhapsthatinthepresenceofarating,such disclosure containproformaswereratedinvestmentgrade, which didnot documents oftheoffering 1.20x.Interestingly,63% above ranges withprojections 24%and54%for coverageoflessthan1.00xtobetween with projected 9 . 5 7 13.4% 37% 554 6.4 49% 5 6.5 65% 9 5.8 49% 3 . 0 5 9.1% 35% 603 6.7 53% 67% 27% 2.00x –2.99x 3.00x+ 4% <1.00x 11% 1% No ProFormas NUMBER . 546 6.3 7.4 7.6 19% 1.60x –1.99x 19% OF ISSUES 440 665 0 2 13.6% 32% 601 578 587 577 BY 1.40x –1.59x DSCR 1.20x –1.39x 4 10.7% 44% 0 14.6% 30% 4 13.2% 34% 3 13.9% 23% 76% 18% 17% 1.00x –1.19x 23% 6% 14.2% Na above 15%above medianagesandenrollments. lower alsohave withdebtburdens consistentlyasdebtburdensrise,andschools decrease that wassubsequentlyupgradedtoinvestmentgrade.MedianDSCRs network gradeofferingwasforagrowingcharter remaining non-investment initsthirdyear.The gradeofferingalsoforaschool non-investment andanother initsthirdyearofoperation one unratedissueforaschool therewas burdensofunder5%.Within thisaberrantcategory, projected offeringswith ofthose debtburdenswiththeexception withlower schools The percentageofinvestmentgradeofferingsisgenerallyhigherfor upper-endrange. recommended use a15% debtburden,with12% benchmark formaximum to15% the schools familiarwithcharter underwriters needs.Most meet itsfacilities dollarsto much ofitsoperational too ifitdiverts program of itsacademic tomaintainthequality school Itisdifficultfora charter schools. charter debtburdenisconsideredacreditstrengthwhenunderwriting A lower formas was13.4%, was13.5%. andtheaverage offeringswithpro of 20%.The debtburdenforthe309 medianprojected burdens inexcessof15%, burdensinexcess including6%thatprojected 55%15% debtburdensbelow projections, projected and26%projected Of the379 issuances,19% outstandingbond containproforma didnot Burden D 15% –19.99% All No Pro Formas 20%+ 12% –14.99% 10% –11.99% 5% –9.99% <5% etBre fIse Par Millions #ofIssues Debt Burden I e ss b t uan c e & Cred 7 466541% $4,686.5 379 49 60 4$305.6 24 95 70 77 4. 5 0 5 . 9 4 2.99 34% 991 4.4 25% 50% 25% $41.1 4 i t Chara 130928% $1,300.9 $491.6 92925% $942.9 81263% $821.2 7326%5 5 . 5 2 1.84 32% 652 8.4 35% 5% 60% $783.2 c t er is Investment t Grade % ics 51% 3 13% 13%

b y

D Investment e rd nae g noletWaitlist Enrollment Age Unrated % Grade % b Non- t 10% 14% 13% 10% 2% Burden 9 . 5 7 1.53 37% 554 6.4 49% 2 . 3 4 1.43 24% 435 5.4 62% 58% 75% 27% 47% 20%+ NUMBER 6% 15% –19.99% No ProFormas 20% 6.8 . 546 6.3 2.1 7.0 19% OF ISSUES 2 8 1.59 38% 626 584 564 BY 12% –14.99% 5% –9.99% DEBTBURDEN 25% 16% 0 1.46 40% 8 1.35 38% 76% 10% –11.99% <5% 1% 13% DSCR Na 25 Credit Characteristics At Issuance 26 Credit Characteristics At Issuance coverage ratios across rating categories werehealthy.Debtburden ratingcategories across coverage ratios capturedinthemedians.Generally, projected arenot and theirratios containproformas, oftheinvestmentgradeofferingsdidnot be that44 could oftheexplanation lessofatrendline,butpart mediansshow DSCR higherdebtburdensthantheinvestment-gradeofferings. projected schools alwaysbetter.Theis not grade offeringsfortheselargernon-investment illustratingthatbigger gradation, median forissuancesinthe“BBB-/Baa3” and818, higherthanthe both had medianenrollmentsof806 respectively, Issuancesinthe“BB+/Ba1”gradations and“BB/Ba2” double-B category. arewithinthe Again,theexceptions highlyratedschools. higher formore debtburdens.Similarly,enrollmentandwaitlistpercentagesare projected withhigh offeringsforsmallschools which containsonlytwo category, Thehigher gradations. tothisruleisforthe“BB-/Ba3” oneexception uniformlyolderwith Thegradation. medianageatissuanceisalmost which detailsmediansbyrating issuance isapparentinthetablebelow, The thedifferentcriteriaandratingsassignedat between relationship category. grade of thetotal,wereassignedratingsindouble-Bnon-investment or10% and39, assigned ratingsinthetriple-Binvestmentgradecategory, which obtainedsuchfor schools ratings,155, or41%ofthetotal,were underlying ratingbasedontheschool’s creditatissuance.Oftheofferings Of the 379 issuances, 185, had no bond outstanding charter school or 49%, R BBB+/Baa1 Rating All Unrated BB-/Ba3 BB/Ba2 BB+/Ba1 BBB-/Baa3 BBB/Baa2 I at ss i uan n g c e & Cred fIse fIse a ilosAeErlmn Waitlist Enrollment Age Par Millions %ofIssues # ofIssues i t 7 0.%$,8. . 5 7 .313.4% 1.53 37% 554 6.4 $4,686.5 100.0% 379 185 114 874 4016.9 $440.1 7.4% 28 Chara 37 .%$7110.9 $67.1 1.1% 4 .%$2286383%15 16.8% 1.51 32% 338 8.6 6.8 $12.2 $179.9 0.5% 2.4% 2 9 c t er 88 15443.9 $1,524.4 8.6 48.8% $1,451.6 30.1% .%$,1. . 1,290 9.7 $1,011.2 9.8% is t ics

b y rat i n g for younger, smaller schools. smallerschools. for younger, theseunrated offeringstendedtobe although investment gradecategory, in thenon- tothose medians forunratedofferingsaregenerallysuperior lower debtburdens.Debtcoverageandburden significantly having ofatrendline,withhigherratedofferingsgenerally more medians showed Unrated 49% 380 806 818 676 873 NUMBER OF 149% 3 .213.9% 13.3% 1.52 14.4% 1.78 23% 1.36 41% 33% 1 .411.5% 1.54 41% 77% ISSUES BB-/Ba3 1% BB+/Ba1 BBB/Baa2 BY 7% 10% BB/Ba2 DSCR ING RAT 2% .911.2% 1.39 .410.9% 1.54 BBB+/Baa1 BBB-/Baa3 1% 30% Debt Burden each of the following items: ofthefollowing each Averages andmediansarecalculatedforYear 1andtheLatestYear for oftheproformaanalysis. aspart we includedenrollmentprojections schools, expensesandrevenuesforcharter enrollmentdrivesboth Because more years. tofiveor ranging fromtwo The hadtimehorizons proformasincludedintheofferingdocuments Year budgetyear,a2009 a2008 1anda2012 have would LatestYear. withafour-yearproformahorizon example, anofferingissuedin2008 (LatestYear). timehorizon of theproformasiftheyhadashorter For after thebudgetyear:firstyear(Year 1)andthefifthyearorfinal years oftheprojection after thebudgetyear.We datafortwo collected definedasthenumberofyears withthehorizon timehorizons, had varying formas, representingtotalissuanceof$3.87 proformas The billion. 309 containedpro or81%,oftheofferingdocuments credit analysis.Only309, universe of379 inthe offeringsemployed bond school outstandingcharter fromthe available weanalyzethebudgetprojections In thissection, PRO Ov ■■ ■■ ■■ ■■ Net Income:Total revenuelesstotalexpenses. andamortization. depreciation expenses,such as capitalexpendituresandnon-cash debt service, Total Expenses:Projected totaloperatingcashexpenses,excluding Total Projected Revenue: totaloperatingrevenuesfortheschool. alternate measure,whereunavailable. Enrollment: oran Projected studentheadcount,whereavailable, er 379 ISSUES F vi Five Years+ ORMA e (120) 32% w AT ISSU PR IN

O F ANALY CREDITC ORM A NCE A HORIZONS S UNIVERSE Four-Year IS HARACTERISTICS (167) No ProFormas 44% 19% (70)

Two-Year Three-Year 1% (3) (19) 5% resulting in lower medians for the sector as a whole. asawhole. mediansforthesector resulting inlower issuances, represent arelativelysmallshareofthenumbertax-exempt they raisetheaverages, range.While theselargeborrowers $200 million largeenrollmentsandbudgetsinthe$100 thathave borrowers to million network aredrivenbyseverallargecharter Thesemillion. higheraverages comparedtomedianYearrevenue equals$9.6million 1revenueof$4.9 Yearenrollment andtheoperatingbudgetitems.Forexample,average 1 timesthe mediansforboth areapproximatelytwo be seen,averages atroughly13%,is projected resultinginacashsurplusof7%.Ascan of20%.Debtburden fordebtservice revenue, withnetincomeavailable of toequalapproximately80% expensesareprojected categories, yearsandmedianaverage proformas.Across yearsforthe309 two forthe andmediancalculations The summarizesaverage tablebelow e noe$.7 184$.7 $2.619 $1.272 $9.907 $12.526 $4.509 $1.844 $5.692 $7.781 $0.972 $9.625 $3.775 Net Income $4.862 Total Expenses Total Revenue etBre 25 25 34 13.5% 13.4% $1.545 12.5% $0.795 12.5% $1.218 $0.640 Debt Burden Debt Service Enrollment Item DSCR te Agg ■■ ■■ ■■ Debt service dividedbytotalrevenue. Debt Burden: Debtservice dividedbydebtservice. service fordebt Debt ServiceCoverage Ratio:Netincomeavailable expenses. leasesandothercapitallease aswellfacility andsubordinate, senior interestandprincipalpayments,both Debt Service:Allprojected net available incomeinthecoveragecalculation. net available to addedback i.e.,thesefeesarenot coveragecalculations; service indebt takenintoaccount isnot management organizations ofmanagementfeesforcharter in revenues.Subordination yearsurpluses isreflected ofprior carry-over expenses, andno isincludedin ordepreciation capital expenditures,amortization asrequiredtoensureconsistency.Forexample,no documents adjustments weremadetotheproformasincludedinoffering single-yearoperatingcashflowitems,and Budget figuresreflect re g a P einAeaeMda Average Median Average Median ro .118 .31.69 1.53 1.84 1.51 650 Forma Year 1 1,163 D a ta ($ inMillions) 735 Latest Year 1,477 27 Pro Forma Analysis 28 Pro Forma Analysis 13.7%. One possible explanation for improved coverage in the face ofa 13.7%. forimprovedcoverageintheface explanation Onepossible to 1.55x toincreasefrom12.3% andthemediandebtburdenprojected to toincreasefrom1.51x projected DSCR withthe median five-year period, 10% increasesby25% overthe income, oralmost annually.Debtservice 27% increaseinnet andexpensesby23%,resultinginamedian39% togrowby or6%annually.Revenuesareprojected 24% overtheperiod, Finally, forthe120 five-yearproformas,enrollmentincreasesbyamedian increase from12.8% to13.4%. to to1.52xwhiledebtburdenisprojected to improveslightlyfrom1.50x isprojected or roughly5%annually.Somewhatparadoxically,theDSCR cumulatively growbyamedian15% to18% over thefour-yearperiod, enrollment growth.Revenues,expenses,netincomeanddebtservice amedian13%pro formasproject increaseinenrollment,or4%annual analyzed.The 167 numerousofthe309 Four-year proformasarethemost 10.6% to13.4% overthe proformahorizon. to1.52xandincreasingdebtburdenfrom reducing coveragefrom1.60x at17%, expendituresisprojected in debtservice 9%annually, oralmost or14% togrow29%overtheperiod, annually.Growth income isprojected Asaresult,net expendituregrowthof9%overthethree-yearperiod. lower withrevenuegrowthof15%growth of8%,or4%annually,together and The 19 medianenrollment project proformaswithathree-yearhorizon ofsomelevelcapitalizedinterest. reflective years, similarforthetwo anddebtburdenarevery enrollment. DSCR no increased itemswith increasesinbudgetary inflationary project andtheyessentially timehorizon, only threeproformaswithatwo-year 1 andtheLatestYear There basedonthedifferingproformahorizons. are Year between tabledetailsmediangrowthprojections The accompanying years. median debtburdensforthetwo and differenceintheaverage percentage ofrevenue,thereislittleorno debtburdeniscalculatedasa payments forthelateryears.Because Latest Year in annualdebtservice duetoreducedvariability projections compared toamedianof1.51x. This forthe differencediminishesfurther forYear DSCR anddebtburdens.The average ratios 1proformasis1.84x andmediancoverage average between There isconsiderablylessvariability ed Gro P ro j e c t w t h and 9%. 5% rangedbetween and 7%,medianannualgrowthindebtservice 4% annual growthinenrollment,revenueandexpensesrangedbetween ofthree,fourorfiveyears,median Based ondifferentproformahorizons growth,itwasmeasured. proformasprojected Generally, whilemost expenditures asapercentageofrevenues. needswhilereducingoverall higher percentageofrevenuetotheirfacilities themtodedicatea thatallow ofscaleintheiroperations some economies atfullenrollmentattain orschools higher debtburdenisthatlargerschools SRLts er24 .215 1.55 1.52 1.52 2.40 LatestYear DSCR a ilos$16$4. 1837$1,781.1 $1,823.7 2% $249.0 Total Revenue $11.6 Par Millions aetYa .%1.%1.%13.7% 13.4% 1.51 12.3% 13.4% 12.8% 1.50 9.7% 10.6% 1.60 Latest Year 9.3% Debt Burden 2.34 Debt BurdenYear 1 29% 1% 9% YearDSCR 1 -2% Ratios 2% Debt Service Net Income Total Expenses Item Enrollment Cumulative Growth # ofIssues & n M ed R a i t a i o s P

ro b y

j P e ro c -er3Ya -er5-Year 4-Year 3-Year 2-Year t %8% 0% 3 ed Gro Forma w 15% 17% H 9167 19 t or h

i zon 13% 15% 18% 16% 17% 39% 24% 25% 23% 27% 120 should provide a valid overall profile of the charter school bond sector. school provideavalidoverallprofileofthe charter should asignificant datasamplethat schools, by298 offerings wereundertaken bond these354 borrowers, Net ofmultipleissuancesbythesameschool issuescomprisethedatasetforourfinancialanalysis. bond remaining 354 to theendofFY11 forsixotherschools. The andinsufficientinformation currentFY11was no for financialinformation thatissuedprior 12 schools newtofileauditedfinancialsfortheyear were too there (13). Inaddition, that orschools offeringsformultipleschools credit(24)andthose charter byeitheraletter ofcreditoranon- issuesthatweresecured bond (39), FY11 thatissuedforthefirsttimeafterendof offerings forschools inFY11, tomunicipaldatarepositories including: disclosure require school fornot bond issuancesthatdid 76 ofthe financials wereunavailable oftheoutstandingissues.Audited the numberandoriginalparamount or79% oftheissuancestotaling$4.26billion, ofboth for354 borrowers fullandcompleteFY11 were abletoaccess financialdataontheschool inissuance,we totaling$5.41billion outstandingtransactions Of the448 an8/31year-end. having year-end, withtheexceptions fiscal hada6/30 Allbutahandfulofschools fromschools. cases, directly websites,issuerwebsitesand,insome department TM3, stateeducation I EMMA, ofsources,includingBloomberg, obtained financialsfromavariety weanalyzedauditedfinancialstatementsforFiscal schools, Year 2011. We bond-financed charter of In ordertoassessthecurrentfinancialcondition C U Insufficient or Non-Current Information (Pool/New) n URRENT iv Other (18) (13) 4% 3% er LOC/3rd Party s (24) e 5% FY F 11 C NAN HAR CI 448 OUTSTA 448 TER SCHOOL TER Post Issuance A L

(39) 9% METR NDING NCIAL FINA ICS Sufficient Information ISSUES (354) 79% DISCLOSURE ownership. regardingdebtand/orbuilding school’s andabidebystatelaws facilities inordertofinancethe school onbehalfoftherelatedcharter that borrowed Theseprojects. “enterprises”oftenincludedaffiliatedbuildingcorporations fortheirbusiness-related andenterpriseaccounting activities governmental fortheir wheretheyadheredtofundaccounting approach combination useda schools whiletheremaining35 usedcashaccounting, school rules(128)fund accounting rules(134). orenterpriseaccounting One eithergovernmental primarilyemployed For FY11, schools charter the298 Acc and conclusions aremeaningful. and conclusions standardsandensurethatourmedians may becomparedacross By makingtheseadjustments,weareconfidentthatschools FY11. during activity iftherewassignificantrefinancing particularly coverageandotherratios, figures andtocalculatedebtservice comparable such, numerousadjustmentswererequiredtodevelop As inenterpriseaccounting. butnot accounting governmental investment andprincipalpaymentsareincludedasexpensesin Capital fundactivities. on generalfundandothergovernmental and changes tototalnetassetsintheanalysisratherthanfocusing Therefore, weincluded totalnetassets accounting. governmental using those butnot usingenterpriseaccounting for schools For example,capitalassetsareincludedonthebalancesheet andanalyticalconsistency. numerous adjustmentsfordefinitional necessitated schools standardsforthe298 The mixofaccounting ount i n Enterprise g (134) 45%

P ACCOUNTING r Combination a 12% c (35) t 298 SCHOOL 298 ic e s

PRACTICES S (128) Fund 43% Cash 0% (1) 29 Current Financial Metrics 30 Current Financial Metrics outstanding basedonthisdifferingratingstatus. andtotaldebt provideabreakdownofthenumberschools graphs below pledge.The obligation insurance, abankletterofcreditorstatemoral ratingsbasedsolelyonaformofcreditenhancement,such asbond bond ratingsbasedontheschool’sbond underlyingcredit,and20,or14%, have frequently. Within the rateduniverse,123 have or86%, oftheschools, marketmore thebond tendtoaccess ratedschools larger andbecause of totaldebtoutstanding.Thisratedofferingstendtobe because isboth forroughlytwo-thirds account 143. however, withratedbonds, Schools 155, unratedbonds, which ratedbonds, have which have those andthose aredividedfairlyevenlybetween schools financing. non-bond The 298 through through theendofFY11 borrowed debttheschools plusadditional lessanyamortization issuanceof$4.26billion represents originalbond Thistotal outstandingdebtofjustover$4.3billion. outstandingfigure includedinouranalysishad As oftheendFY11, schools the298 Ov er vi e w Underlying SchoolRating (123) 41% NUMBER OFSCHOOLS Rating Only Enhanced (20) 7% 298 Unrated (155) 52% BOND ($ inMillions) ING RAT sidebar onthenextpage. intheaccompanying analysis arestandard,weprovidebriefdescriptions inthis andmetricsemployed ofthefinancialdefinitions While most criteria: weanalyzedthedatabythreedifferent sector, bond school of thecharter andprovideacomprehensiveassessment significant financialinformation others.Inordertoanalyzethis among and dayscashonhand(DCOH), coverage, debtburden,perstudent,percentagechange innetassets school’sdetermining acharter fiscalstrength,includingdebtservice in 22 thatwebelievearethekeybalancesheetandoperatingratios than70 themore inourresearch, weselected variablesemployed Across STATUS ■■ ■■ ■■ grade) (investmentgradeornon-investment ratingcategory Underlying school State (fortoptenstates) Bond ratingstatus(ratedorunrated) Underlying SchoolRating ($2,607) 61% DEBT OUTSTANDING Rating Only Enhanced ($303) 7% $4,302 ($1,393) Unrated 32% participate. participate. tomeetinvestmentgraderatingcriteriainorder to which requiresschools throughColorado’s program, borrowed obligation of theseschools moral Fifteen inthisdivision. school’s credit,isincludedinthe“Rated”category underlyingratingbasedonthe ratings,butno that hadenhancedbond and the155 debt.Dataforthe20schools unratedbond which have debt breakdownsforthe143 ratedbond categorical which have schools aswell schools table,we providemediansforall298 In theoverview aly A n Debt perStudent perStudent Debt Service Expense perStudent Revenue perStudent Net DebttoAvailable Income Net Assets Unrestrictedliquidresourcesdividedbytotaldebtoutstanding. Total UnrestrictedCash&Equivalentsas%ofDebtOutstanding -All DCOH -Unrestricted DCOH Total UnrestrictedCash&Investments Net Income Total Expenses Total Revenue Debt Burden-MADS Debt Burden-All Coverage Bond MADS All DebtDSCR Bond DSCR (MADS) AnnualDebtService Maximum Actual DebtService Debt Outstanding Bonds Outstanding Enrollment Summary ofDefinitions sis

b y Bond R a t i n g S tatu s Debt outstandingdividedbyenrollment. dividedbyenrollment. Actual debtservice Total expensesdividedbyenrollment. Total revenuedividedbyenrollment. dividedbynetincome. account, reserve Debt outstanding,netofdebtservice Total assetslesstotalliabilities. dividedbydailyoperatingexpenses. funds.Sumofpreceding reserve and debtservice funds Itexcludesconstruction set-asidefundsandoperatingreserves. debtservice replacements, and unrestrictedcashand equivalentsandtrustee-heldcashforreserves Includes both divided by365). Unrestricted cashandequivalentsdividedbydailyexpenses(totaloperating use. foraspecific reserved Cash andliquidinvestmentsthatarenot Total revenuelesstotalexpenses. andamortization. expenses, such asdepreciation Total capitalexpendituresandnon-cash operatingcashexpenses,excludingdebtservice, Total operatingrevenuesfortheschool. includeotherindebtedness). dividedbytotalrevenue(doesnot Bond MADS dividedbytotalrevenue. Actual debtservice Net incomedividedbyMADS. forFY11. debtservice Net incomedividedbyactual forFY11. debtservice bond Net incomedividedbyactual due in any single year of the offering. debt service of bond amount Generally equal to the maximum Principal andinterestpaymentsonalldebtoutstandinginFY11, netofcapitalizedinterest. andcapitalleases. debt,otherloans All outstandingbond debt. Outstanding bond Student headcountduring2010–2011 year. school or more accounted for $593 million, or 14% million, ofdebtoutstanding. for$593 accounted or more withenrollmentsof5,000 2% ofdebtoutstanding,whilethe ofschools or million, foronly$85 studentsaccounted enrollments offewerthan250 with of totaldebtoutstanding.Ontheextremes,7%schools or86% billion, for$3.69 accounted studentsormore of500 Schools capital leases. with thebalanceof$271 and loans representing other non-bond million transactions, bond outstandingtax-exempt wasissuedviathe354 billion, $4.03 reviewedinthisanalysis.Ofthattotal,thevastmajority, schools 298 As oftheendFY11, indebtwasoutstandingforthe justover$4.3billion 31 Current Financial Metrics 32 Current Financial Metrics schools with unrated debt, where the median stood at 501 students. at501 withunrateddebt,wherethemedianstood schools students, significantlylargerthanfor withrateddebtwas798 for schools Medianenrollment asawhole. mediansforthesector resulting inlower issuances, represent arelativelysmallshareofthenumbertax-exempt of 16,721. they raisetheaverages, borrowers While thelargenetwork of 122range ofenrollmentwasconsiderable,fromalow studentstoahigh The networks. oflargecharter duetotheeffects of964 higher average students,withamuch was646 schools Median enrollmentforthe298 Enrollment Debt perStudent Debt Service perStudent Debt Service Expense perStudent 9.0% Total UnrestrictedCash&Equivalentsas%ofDebtOutstanding -All DCOH Revenue perStudent % ChangeinNetAssets Net Assets Net DebttoAvailable Income DCOH -Unrestricted DCOH Total UnrestrictedCash&Investments Actual DebtService Net Income Debt Burden-MADS Total Expenses Total Revenue Debt Burden-All Coverage Bond MADS All Debt DSCR All DebtDSCR Bond DSCR Bond DSCR Enrollment Total DebtOutstanding Number ofSchools Financial Metric Debt Outstanding Bonds Outstanding n M ed i a s

b y Bond R a t i n g S tatu s 4321449$,0,0,2 $1,392,670,389 $2,909,504,020 $4,302,174,409 42498$,4,4 $3,452,863 $5,740,441 $4,264,998 92500$15500$7,627,730 $11,515,000 $9,215,000 86750$11353$7,055,000 $11,143,503 $8,617,500 53786$,4,3 $4,188,241 $6,847,432 $5,347,856 8137$,3,2 $476,997 $1,737,123 $861,387 6112$8,8 $595,776 $785,887 $651,192 9557$,9,3 $774,811 $1,294,236 $975,547 7674$,9,7 $517,990 $1,297,473 $776,714 1,4 1,4 $14,293 $14,648 $14,641 outstanding and$11.5 fordebtoutstanding. million higher,at$11.1rated debthadmediansroughly50% forbonds million outstanding and$7.6bonds with fordebtoutstanding.Schools million withunrateddebthadamedianof$7.1segments. Schools for million market issuesizeforthetwo corresponds primarilytodifferencesintypical withratedandunrateddebt The mediansforschools differencesbetween networks. charter ofseveral frequentborrowings withthe largerandmore yearsalong recent in paramount aredrivenbythe sector’s generally higheraverage averages was$14.4 Theseaverage million. mediansand sizabledifferencesbetween whilethe at$9.2million For totaldebtoutstanding,themedianstood wassignificantlyhigherat$13.5 whiletheaverage was $8.6million million. The outstandingforthereviewedschools ofbonds mediandollaramount Bonds &DebtOutstanding $1,030 $8,124 $6,875 13.0% 10.9% 12.7% 1.41X 1.45x 1.37x 8.6x 646 298 All 99 58 ae Unrated Rated $6,934 $8,116 10.7% 11.9% 12.1% 12.2% 1.46x 1.63x 1.56x $927 8.4x 798 143 113 70 $6,789 $8,154 $1,147 13.4% 13.3% 1.30x 1.33x 1.33x 6.8% 8.6% 8.7x 501 155 48 75 which stood at 1.33x for both categories. at1.33xforboth which stood ofthesector and1.56x, thanfortheunratedportion 1.63x respectively, withrateddebtweremateriallyhigherat medianforschools Debt DSCR medianandAll at1.41x.Notsurprisingly,theBondDSCR satisfactory, butstill wasslightlylower, whilethemedianAllDebtDSCR sound 1.45x, forFY11 forall schools number thebetter.The wasa medianBondDSCR coverage,thehigher it paysforoperatingexpenses.Fordebtservice hasto meetitsprincipalandinterestpaymentsafter aborrower cushion, much netrevenue,or measureshow coverageratio The debtservice Debt ServiceCoverage $12 10 0 2 4 6 8 5,000+ 1,000 –4,999 2% 23% $8.6 500 –999 NUMBER OFSCHOOLS 41% All 298 $9.2 <250 AGGREG 7% MEDIAN ATE DEBTOUTSTA 250 –499 Bonds Outstanding 27% BONDS $1 1. ($ inMillions) 1 &DEBTOUTSTA Rated NDING the median for schools withunrateddebtwas1.30x. the medianforschools was 1.37x.schools and The withrated debtwas1.46x, medianforschools oftotaldebtoutstanding,94%.The coverageforall medianMADS majority bond debtrepresents theoverwhelming audited financials.However,this inthe specified typically arenot forotherobligations amounts maximum debtasthe metriconlyincludesbond thatthe MADS tonote is important It calculation. AnnualDebtService This trendcontinuesfortheMaximum $1 BY 1. Debt Outstanding 5 1,000 –4,999 SCHOOL 43% NDING 5,000+ 14% DEBT OUTSTANDING SIZE $4.3 Billion $7.1 Unrated 250 –499 12% $7.6 500 –999 <250 2% 29% 33 Current Financial Metrics 12 10 0 2 4 6 8 34 Current Financial Metrics outstanding debt with coverage above 1.60x. outstanding debtwithcoverageabove of withrateddebthadarelativelyhighershare, 42%versus30%, Schools 1.20xand1.59x. versus 28%,inthemiddlecoveragerangesbetween with unrateddebthadarelativelyhighershare,39% 1.20x.Schools below ratedandunrateddebthadcoverage withboth outstanding forschools percentofdebt rangesfortheratedandunrateduniverses. Thirty various There the ofdebtamong wasaslightdifferenceinthedistribution calculation. the ratio account in not takeninto and,therefore,itsbenefitwas offering document, clearlydetailedintheauditor wasnot capitalized interestamount the however, ofdebtservice; to capitalizedinterestmeetallorpart hadaccess wheretheschools borrowing other cases,itwasduetorecent coveragewasduetotheschool’sthis low In strainedfinancialcondition. in outstandingdebthadcoverageoflessthan1.00x.Inafewcases, million approximately$385 On theweakerendofcoveragespectrum, cashflow. generatingsignificantadditional without pay theirdebtservice and programs fundtheir educational thatmanyschools thefact reflecting $870 ofoutstandingdebtinanysinglerange,almost amount million, The 1.00x-1.19xhighest rangesinexcessof1.60x. rangehadthelargest fallingintothethree coverage range,andasizabletotal,$1.6billion, fallingintothe1.40x-1.59x million coveragerange,over$500 1.20x-1.39x indebtfallingintothe million healthy coverageinFY11,$800 withalmost ofoutstandingdebthad themajority As illustratedinthegraphabove, 2.00x –2.99x 1. 1. 1. 1.00x –1. 20x –1. 20x –1. 40x –1. 60x 3.00x+ <1.00x 39 59 99 19 x x x x 02 00 All DSCR ($ inMillions) 40 $385 06 -AllDebt $456 of debtoutstandinginFY11 withindifferentburdenranges. smaller universes.The onthenextpageillustratesdollaramount chart substantialdifferences within therearemore All Debtburdens,although and medianMADS asignificantdifferencebetween aggregate, thereisnot FY11 burdensfortheactual measure.Inthe resultingin lower debt service, FY11 capitalizedinterestis nettedoutofactual burdens arehigherbecause offerings,theMADS leveldebtfortheirbond tendtohave schools charter rated debtandamedianof13.3% withunrateddebt.Although forschools with amedianof13.0% amedianof12.1% forallschools, with forschools trendline, less pronounced, The asimilar,although burdenfollows MADS materially higherat13.4%. median was10.7%, withunrateddebt,wherethemedianwas andschools withrateddebt,wherethe however, forschools a significantdifference, was12.7%. schools the medianAllDebtburdenfor298 There was alltheirstudents.ForFY11,their needsatfullenrollmentbeforetheyhave thatwillmeet andarepayingforafacility mode they areinexpansion 15%;debt burdenbelow exceedthispercentagewhen schools however, tomaintaina schools discussed,itisadvisableforcharter As previously performance. academic affecting potentially shortchanged, a school’s maybecome program coreeducation meanthat manydollarsspentondebtservice the numberbetter,astoo lower the Forthisratio, school. insight intothefinancialhealthofa charter criticalmetricthatprovides principal, interestandcapitalleases,isanother Debt burden,definedasthepercentageofannualrevenuespenton Debt Burden Rated $536 $566 $580 00 Unrated 80 $791 01 $868 ,000 02 00 40 06 00 80 01 000 environment in many jurisdictions. Median net income available fordebt Mediannetincomeavailable environment inmany jurisdictions. giventhedifficultfiscal impressiveaccomplishment year, aparticularly netincomeforthe reviewed,allbut fourhadpositive schools Of the298 respectively. and$3.5million, with medianexpensesof$5.7million withratedandunrated debtcontinued, schools the largedifferentialbetween toahighof$126 of$600,000 expenses, fromalow Asexpected, million. of$7.6average Aswithtotalrevenue,therewasawiderangeof million. the wellbelow at$4.3million, On theexpenseside,medianstood students. withamedianenrollmentof501 was $4.2million, withunrateddebt students.Medianrevenueforschools enrollment of798 withamedian withrateddebtwas $6.8million, Median revenueforschools higherenrollments. tendedtohave thatratedschools thefact reflecting withunrateddebt, withrateddebtandthose schools differential between andasignificant revenue andahighof$149 million of$800,000 low Therewas $9.2million. a wasanextraordinarilybroadrangebetween andtheaverage The was$5.3million, mediantotalrevenueforallschools Operating Metrics comparedtoonly6%fortherateduniverse. burden of20%ormore Similarly,14% withratedbonds. of schools oftheunrateduniversehada hadadebtburdenof15%unrated bonds comparedtoonly28% ormore with Forexample,42%oftheoutstandingdebtforschools categories. higher percentageofoutstandingdebtfallingintotheburden a withunrateddebttendedtohave Schools burden of20%ormore. 15% benchmark. Ontheotherextreme,$374 or9%,hadadebt million, than 10%. the hadadebtburdenbelow or68%, Atotalof$2.8billion, ofoutstandingdebt,hadadebtburdenless or39% Over $1.6billion, 12% –14.99% 15% –19.99% 10% –11 5% –9.99% 20%+ .99% <5% 02 00 $268 $3 13 40 $374 06 DEBT BURDEN All ($ inMillions) 00 -ALL days incontrasttothe75 withunrateddebt. daymedianforschools of136 days.The withrateddebtwas113an average medianforschools with daysforallschools, funds.The medianforthismetricwas99 reserve funds anddebtservice held bythetrustee,butexcludingconstruction -All,byincludingcash We inclusivemetric,DCOH alsoanalyzedthemore withunrateddebt. daymedianforschools higherthan the48 roughly 50% of76 days.Theaverage medianfortherateduniversewas70 days, median forthismetricwas58 withamuch higher daysforallschools, tounrestrictedcashand cashequivalents.Theincluded inthecalculation -Unrestricted,limitsthecash The variations. DCOH common firstmeasure, most this measureiscalculateddifferentlybyanalysts,weusedthetwo skewedbyaschool’s asresultsarenot analytical tool size.Because useful isaparticularly cashtodailyexpenses.DCOH or available To metric, weanalyzedtheDCOH ofthesector, determinetheliquidity Days CashonHand-DCOH with unrateddebt. forschools $596,000 inFY11,debt service withrateddebtand which forschools was$786,000 withmedian page depictstheseoperatingstatementmedianstogether just under$775,000 withunrateddebt.The forschools onthenext chart withrateddebtand forschools universes, withamedianof$1.3million There theratedandunrated networks. wasasignificantdifferencebetween $27to ahighofalmost foroneofthenation’s million largestcharter was$975,000,service rangingfromnegativenetincomeof$400,000 Rated DEB 80 01 T Unrated $923 ,000 $971 1, 20 01 $1,336 ,400 35 Current Financial Metrics 02 00 40 06 00 80 01 000 12 00 14 00 36 Current Financial Metrics expenditure levelswisely. marketaremanagingtheirrevenue and bond thetax-exempt accessed thathave borrowers school ofcharter years. Itappearsthatthemajority experiencedoverthepastseveral pupil fundingthatmanystateshave andfreezesinper ofoverallfinancial healthgiventhecutbacks reflection had amedianincreaseof8.6%.These strong mediansareaparticularly rated debthada12.2% withunrateddebt medianincreaseand schools inasolidmedian change innetassetsof reflected with 10.9%. Schools netincome in FY11The withpositive is highpercentageofschools % ChangeinNetAssets median ofapproximately$475,000 withunrateddebt. forschools andthemuch smaller withrateddebtat$1.7million median forschools the sizabledifferentialbetween withaparticularly was$860,000 schools change innetassetsfromFY10 toFY11. The mediannetassetsforall school’sthe sizeofeach balancesheet,ornetassets,andthepercentage including borrowers, school We alsoanalyzedbalancesheetsforthe298 Net Assets rated andunrateddebtwassignificantat 11.9% and6.8%,respectively. with The schools at9.0%forallschools. contrastbetween metric stood ofdebtoutstanding.InFY11,equivalents totheamount themedianforthis iscomparingaschool’s wayofmeasuringliquidity cashand Another Unrestricted Cashas%ofDebtOutstanding $8 0 2 4 6 $5.3 $4.3 All $1.0 Revenue $0.7 OPER Expenses ATING $6.8 ($ inMillions) STATEMENT MEDIAN $5.7 Rated schools. The debt per student median was more consistent across these The consistentacross schools. debtperstudentmedianwasmore forunrated borrowing costs thehigher unrated debt,primarilyreflecting withrateddebtandahighermedianof$1,147for schools with forschools median of$927 withalower perstudentwas$1,030, Median debtservice $6,789. at slightly higherat$6,934,andtheunratedmedianwaslower expense perstudentwas$6,875 The forallschools. ratedmedianwas rated debtandamedianof$8,154 withunrateddebt.Median forschools at$8,124, stood for allschools withamedianof$8,116 with forschools ofthemetrics.Median revenueperstudent was awiderangeforeach there theratedandunrateduniverses,although differbetween appreciably anddebtperstudentdidnot Median revenue,expense,debtservice Per StudentData onceenrollmentstabilized. ratio, a lower increasedcashflow,and projecting medians tendedtobegrowingschools the which fellabove schools Those with amedianof8.6xforallschools. ranges, arewithinacceptable forthesector debt. Generally,leverageratios withunrated rated debtandaslightlyhighermedianof8.7xforschools with unrated universesforthismetric,withamedianof8.4xschools what itscashflowcansupport. intheratedand There waslittlevariation inexcessof borrowed mayhave overleveraged andasignthatschool thenumberbetterandanythingover10.0xlower isconsideredtobe school’s Forthismetric,the cashflowisleveragedbyitsdebtobligations. The NetDebttoAvailable much each Incomemetricmeasureshow Net DebttoAvailableIncome Net Income $1.3 $0.8 S Debt Service $4.2 $3.5 Unrated $0.8 $0.6 0 2 4 6 8 note are discussed further below. below. arediscussedfurther note financialmetricsforthesetoptenstates.Individualof for specific ratingstatus,ratedorunrated.PleaseseeAppendixDformedians bond brokendownbyschools’ withaggregatedebtoutstandingfurther together detailsthenumberofschools For thesetoptenstates,thegraphbelow of thisanalysis. andtheyarethefocus outstandingdebtreviewedinthisreport, $4.3 billion ofthe or86%, billion, and$3.68 schools ofthe298 total of262,or88%, or14%million, oftotaldebtoutstanding.The toptenstatesrepresenta 19 for$620 differentstatesandtheDistrictofColumbiaaccounted or12%, schools, outstanding, or28%.The in remaining36 arelocated 76 or26%,and$1.19 foranother schools, — accounted indebt billion Minnesota,NewYork,states —California,Florida, Pennsylvania andUtah or19% million, for$830 oftotaldebtoutstanding.Sixother accounted Texas’to largerborrowings, or8%oftheschools, schools, 24charter at theendofFY11, ofthetotal.Due representingapproximately40% inthesethreestateshadtotaldebtoutstandingof$1.67Schools billion withacombinedtotalof162. schools, to54%ofthe298 are home andMichigan Arizona,Colorado debtfortheirfacilities. tax-exempt outstanding in29statesandtheDistrictofColumbiahave schools Charter $14,293. withunrateddebt, withrateddebt,$14,648, andschools for schools was$14,641,per studentforallschools thesameasmedian virtually therangeforthismetricwasbroad.Theuniverses, although mediandebt IS aly A n

Debt Outstanding s $900 20 30 40 50 60 80 700 10 0 0 0 0 0 0 0 0

b y State MI 56 NUMBER CO 54 Rated DebtOutstanding OF AZ 52 SCHOOLS&AGGREG TTX UT 27 ($ inMillions) 24 nae etOttnigNumberofSchools Unrated DebtOutstanding ATE DEBTOUTSTA basis and three schools issuingonaratedbasis. basis andthreeschools York issuingonanunrated wereevenlydivided,withthreeschools schools likelytoissueonanunratedbasis.New Minnesota andUtahweremore in Pennsylvania likelytoissueonaratedbasiswhileschools weremore and inCalifornia,Florida In termsoftheothertoptenstates,schools ofthestatetotal. or40% $204 million, total. InMichigan, 34 ofthestate’s 56 hadunrateddebtequaling schools ofthestate for60% inunrateddebtoutstanding,accounting million $350 debtoutstanding.Ontheotherhand,41ofArizona’smillion had 52schools foronly$100had unrateddebt,accounting or19% million, ofthe$550 oftheschools 30% outstandinginthestate.Similarly,Colorado, million foronly7%ofthe$830 was$57for thesevenschools accounting million, wereconsiderablysmaller.Debtoutstanding fortheseschools borrowings inTexasbasis. Onlysevenofthe24schools hadunrateddebt,andthe frequentlyissuedonanunrated inArizonaandMichigan more schools inTexasand whileschools primarilyissuedonaratedbasis, andColorado Michigan andTexas inoutstandingdebt, million than$500 hadmore each states.Arizona,Colorado, of ratedandunrateddebtvariedgreatlyamong ofdebtoutstandingandtherelativecomposition Both theaggregateamount MN 14 throughout thisreport. throughout ratherthanissuerjurisdiction location byschool these schools classified viaanout-of-stateissuer.We borrowed have have Assuch, theseschools conduitborrowers. through traditional market thetax-exempt areunabletoaccess some jurisdictions in schools legaland/orpoliticalreasons,charter For various NDING FL 13 BY STATE PA 10 CA 6 NY 6

0 10 20 30 40 50 60 70 80 90 Number of Schools of Number 37 Current Financial Metrics 80 90 20 30 40 50 60 700 10 80 90 20 30 40 50 60 80 90 20 30 40 50 60 70 70 10 10 0 0 0 0 0 0 0 0 0 0 0 38 Current Financial Metrics had capitalizedinterestinFY11. ontheseissues Onceleveldebtservice issuances that bond withrecent stateshadafewschools most because debt service, andnon-bond despiteincludingbond ratios, than theMADS aregenerallyhigher The AllDebtmediancoverageratios 1.40x. above medians withsix stateshaving California hadmediansof1.20xorabove, of 1.15x forCalifornia.All ofthetoptenstatesotherthanArizonaand rangedfromahighof1.83xforNewYork debtservice bond toalow annual basedonmaximum For thetoptenstates,mediancoverageratios Debt ServiceCoverage country. the policiesacross perpupilfundinglevelsandfacilities costs, construction thismetric,includingdifferingrealestatemarkets, impact obviously factors highestmediandebtoutstanding,$14.8also hadthesecond Other million. $17.4 Pennsylvania, million. highestmedianenrollment, withthesecond any state,1,247 students,alsohadthehighestmediandebtoutstanding, extreme, California’s withthehighestmedianenrollmentof sixschools, median debtoutstandingforits56 Ontheother $6.3million. schools, medianenrollmentof525students,hadthelowest with arelativelylow tended tobehigherinstateswithmedianenrollments.Michigan, clearly,mediandebtoutstanding Most withseveralkeyfactors. accordance inthetoptenstatesvaried Median debtoutstandingforschools Debt Outstanding

Debt Outstanding $20 12 14 18 16 10 0 2 4 6 8 1,247 CA 861 PA MEDIAN 485 NY DEBTOUTSTA 680 FL etOttnigEnrollment Debt Outstanding MN 622 ($ inMillions) NDING &ENROLLMENTBY recent issuances and significant capitalized interest in FY11. issuancesandsignificantcapitalizedinterest in recent includingseveralwith hadonlysixschools, they each because in largepart of issuances.CaliforniaandNewYork debtburdens actual hadthelowest instates withasmallernumber with thegreatestdiscrepanciesoccurring ofstates, foramajority and otherdebtwaslower bonds payments forboth debt for California.Onceagain,debtburdenmediansbasedonactual perpupilrevenuescontributetotherelativelyhighburden andlow costs perpupilfundinglevelshelpexplainUtah’slow median.Higherrealestate of higherinterestratesforpredominantlyunratedissuanceandrelatively the 15%and California — had medians below benchmark. The combination high of18.9% of9.2%inTexas. inUtahtoalow states—Utah Allbuttwo rangedfroma debtservice annualbond Debt burdenbasedonmaximum Debt Burden bystate. ratios coverage debtservice on thenextpagedetailsmedianAllDebtandMADS NewYork’sschools, The graph to2.39x. AllDebtcoveragemediandeclines in FY11, resultingincoverageofovereighttimes.Excludingthesetwo issuanceswithsignificantcapitalizedinterest hadrecent the sixschools wasNewYork extremecaseofthisphenomenon The of most wheretwo accordingly. theAllDebtcoveragewilldecline begins, ascapturedinMADS, 859 XUT TX 668 STATE 633 AZ 51 CO 4 525 MI 1, 1, 1, 0 15 30 450 60 750 90 1, 050 20 350 50

0 0 0 0

0 0 Enrollment 1 1 12 15 20 12 14 18 16 10 450 050 350 30 60 750 90 15 0 2 4 6 8 00 00 0 0 0 0 0 1 1 12 15 050 450 350 60 750 90 30 15 00 00 0 0 0 0 0 Texas highermedianenrollmentsthantheotherseven statesand having inCalifornia, fairly significantlybystate,withschools Pennsylvania and sizevaries clearly,school thesemedians.Most management affect school otherthangeneral and netincomewerehighlycorrelated.Severalfactors revenue,expenses As illustratedbythegraphonnextpage,school Operating Metrics 2.50 3.50 4.50 20 0.50 2.00 3.00 4.00 0.00 1. 1.00 50 12 14 18 16 10 % 0 2 4 6 8 4.28 17 .5 YTX NY UT 1.83 18.9 2.06 8.8 AAZ CA 1.77 17 .5 1.43 14.4 MI 1. 14.9 56 1. 14.3 68 MEDIAN FL CO 1.44 14.4 MEDIAN 1.47 DEBTBURDEN 12.9 All Debt All Debt&MADS All Debt All Debt&MADS MN FL 1.43 13.2 DSCR median net income and median debt service were virtually identical. werevirtually median netincomeanddebt service where Cash flowwastightestinMichigan, Arizona,UtahandColorado, Pennsylvania andMinnesotaprovidinghigherlevelsofperpupilfunding. variesbystate,withNewYork, schools providedtocharters funding support thelevelofperpupil thus higheroperatingstatementmedians.Inaddition, 1.72 13.2 BY MN PA STATE 1. 12.5 41 BY MAD MAD STATE S S 1. 6.9 26 UT NY 1. 12.3 25 1. 11 21 .4 CO MI 1. 10.6 20 1. 9.1 21 ZCA AZ PA 1. 9.5 19 1. 6.8 66 TX 1. 9.2 15 39 Current Financial Metrics 2.0 2.5 3.0 3.5 4.0 4.5 0.0 0.5 1. 1. 20 12 14 18 16 10 0 5 0 2 4 6 8 40 Current Financial Metrics schools having the highest, 205 days. thehighest,205 having schools median, 57 thelowest days,andNewYork having with Minnesotaschools thesamegeneraltrendline, -All,followed inclusivemetric,DCOH more New York The hadmediansofapproximatelythreemonths. medianforthe Texas and Florida Colorado, months. andUtah—hadapproximatelytwo one month’s unrestrictedcashonhand.Three otherstates—Pennslyvania, — Minnesota,Arizona,CaliforniaandMichigan —hadmediansofroughly toahighof102 schools charter daysforNewYork’s Fourstates schools. of33 daysforMinnesota’s -Unrestrictedrangedfromalow Median DCOH Days CashonHand-DCOH $14 250 20 15 10 12 10 50 0 2 4 6 8 0 0 0 0 PA NY TX CO Revenue CA FL MEDIAN NY CAS TX DA YS H FLOW Expenses CAS Unrestricted MN ($ inMillions) PA H ON MEDIAN HAN Unrestricted Cashas%ofDebtOutstanding and only one was less than 5%, as shown inthegraphonnextpage. and onlyonewaslessthan5%,asshown 10% above levels,halfofthetoptenstates hadratios highliquidity have to generallyexpected arenot total outstandingdebt.While schools charter hascomparedtoits resourcesaschool ofavailable it measurestheamount of 4.7%forMinnesota.Forthismetric,thehighernumberbetteras outstanding rangedfromhighsofover16% forTexas andNewYork toalow Median totalunrestrictedcashandinvestmentsasapercentageofdebt FL S BY Net Income UT D (DCOH)BY STATE All MI MI STATE Debt Service AZ AAZ CA UT CO MN $14 250 20 15 10 12 10 50 0 2 4 6 8 0 0 0 0 had median net assets below $1 million, as shown below. asshown $1million, had mediannetassetsbelow range,whiletheremainingfourstates to$2million assets inthe$1million inNew fiscal environments.Schools andMinnesotahadnet York, Florida ofprudentfinancialmanagementeveninsometimesdifficult with ahistory mature schools statestendedtobelarger,more exempt marketinthose borrowed throughthetax- which schools thatthe charter thefact reflecting Pennsylvania, CaliforniaandTexas $3million, hadmedian netassetsabove $55,000 inPennsylvania. in inArizonatoahighof$6.1million Schools ofonly statesfromalow Net assetmediansvariedwidelyamong Net Assets 18 $7.0 2.0 3.0 4.0 5.0 6.0 1. 12 14 16 10 % 0 0 0 2 4 6 8 16.8% $6.1 PA NY TX 16.6% $3.6 CA MEDIAN 12.1% CTED CAS UNRESTRICTED $3.3 TX PA 12.0% $1.9 CO NY MEDIAN NE 11 $1.7 H AS FL FL ($ inMillions) .4% T AS %OF or below 10.0x, and two — Colorado and Florida — were below 11.0x. 10.0x, —werebelow or below andFlorida —Colorado andtwo Mediansforseven ofthetenstatesfellat fiscalsituation. acute particularly of12.4x,of therangewasCalifornia,witharatio ofthestate’s reflective with NewYork at6.6x.Attheweakerend thenextstrongestratio having Texas incomemedianat6.1x, netdebttoavailable hadthelowest The pagedetailsmediansforthetoptenstates. graphonthefollowing Net DebttoAvailableIncome SE TS BY 7.6% $1.1 MN CA DEBTOUTSTA STATE 7.2% $0.9 CO MI NDING 6.2% $0.6 MI UT BY STATE 6.0% $0.4 UT AZ 4.7% $0.1 MN AZ 41 Current Financial Metrics 12 14 18 16 10 0 1 2 3 4 5 6 7 0 2 4 6 8 42 Current Financial Metrics second and fourth highest debt per student, respectively. There highestdebtperstudent,respectively. andfourth islessof second significantly higherperstudentrevenueandexpensemedians,hadthe $11,853, MinnesotaandPennsylvania,otherstateswith respectively. two the highestperstudentrevenueandexpensemedians,$14,662 and $20,000,anditalsohad only statewithmedianperstudentdebtabove had highermediandebtperstudent.Forexample,NewYork wasthe states withsignificantlyhighermedianrevenueandexpenseperstudent Generally, Debt perstudentvariedwidelybystate,asillustratedbelow. Per StudentData $25,000 20,000 15,000 10,000 5,000 12 14 10 0 2 4 6 8 0 12.4 AFL CA NY 10.7 PA MEDIAN 10.4 CO MN NE T DEBTTONE 10.0 UT PE TX Revenue R STUDENTMEDIAN 9.0 AZ MI T AV borrowing costs themselves,comeintoplay. costs borrowing aswell onaperstudentbasisforsmallerschools, costs construction includingrealestateexpenseindifferentmarketsandhigher other factors, hadthesixthhighestdebtperstudent,$15,626.student, $6,353, Clearly, $18,026. medianrevenueper Similarly,Utah,which hadthelowest revenue perstudent,$7,693, hadthethirdhighest debtperstudent, lowest median California,withthefifth revenue rangeof$8,000orbelow. thesemetricsforstatesfallingintotheperstudent between a relationship AILABLE Expenses 8.8 PA CA S BY INCOME STATE IMN MI 7. 9 AZ BY Debt STATE 7. 4 FL 6.6 NY CO 6.1 TX UT 25000 20000 15 10000 12 14 10 5000 0 2 4 6 8 000 0 $1.4 million and an investment grade median of $1.2 million. andaninvestment grade medianof$1.2million. $1.4 million at10%,was farlesspronounced grademedianof with a non-investment $7.5 The comparedto$5.7million. million differencein mediannetincome the 102 withinvestmentgrade ratings,andmedianexpensewas schools for comparedto$6.6 million forthese21schools revenue was$9.6million graderatings.Median with non-investment higherforschools roughly 45% thesehigherenrollments,medianrevenue andexpenseswere Reflecting schools. 1,120 higherthanthe754 medianforinvestmentgrade students,50% inFY11tended tobelarger.Medianenrollmentfortheseschools was gradeschools interestingly,thenon-investment grade. Perhaps most investment currentlyratedeitherinvestmentgrade orbelow with bonds There werematerialdifferencesintheFY11 financialmetricsforschools Operating Performance category. with ratings inthetriple-C rating,onewitha“B+”ratingandtwo “BB-” ratings,onewitha ratings include13 ratings,fourwith“BB” with“BB+” bond ratings.The withnon-investment 21schools with“BBB+” schools ratingsandseven with“BBB/Baa2” ratings,25schools with “BBB-/Baa3” The 102 ratingsinclude70 withinvestmentgradebond schools schools double-B orbelow. graderatingsof non-investment inoutstandingdebtthathave million $492 with and21schools investmentgraderatingsinthetriple-Bcategory have debt. Includedare102 with$2.12 schools inoutstandingdebtthat billion inoutstanding billion $2.61 withunderlyingratings,which have schools table.This tothe123 analysispertains provided intheaccompanying includedinthisanalysisorthemedians underlyingrating,arenot no ratings,but grade ratings.The thathadcredit-enhancedbond 20schools withinvestmentgradeandnon-investment schools medians between underlying ratingsontheirofferingsinordertoanalyzedifferences bythecurrent borrowers We school theuniverseofcharter alsodissected aly A n All ratings employed inourresearch wereasofMay19,All ratingsemployed 2012. asMoody’s “Baa.” and Fitch’s ratingsinthesamecategory “BBB” treatedS&P’s wehave aswelldistinctratingdefinitions, schools ratingagencyhasuniquecriteriaforcharter while each as wellthedebt’s andstructure.Inaddition, legalprovisions quality demandandacademic including management,governance, thatarealsoconsidered, qualitativefactors are severaladditional there school’sa charter isacriticalratingfactor, financialposition ratingagenciesconsider.While thesolecreditfactor health isnot thataschool’s tonote —itisimportant fiscal by ratingcategories —andouranalysisdividestheoverallportfolio financial position sector’s school isonthecharter ofthissection thefocus Although sis

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U nderly i n g

R a t i n g C ate g ory to 5.3% for non-investment gradeschools. to 5.3%fornon-investment amedianof13.3%FY11, having compared withinvestmentgrade schools FY10 inthepercentage change innet assetsbetween and large disparity illustratedbythe is further performance oftheinvestmentgradeschools The financial gradeschools. superior medianfornon-investment $800,000 thandoublethe more wasjustover$2million, investment gradeschools surpluses.Mediannetassetsfor timetoaccumulate hadmore and have tendtobeolder thattheseschools thefact reflecting smaller size,partially werehigherdespitetheir Median netassetsforinvestmentgradeschools Debt perStudent perStudent Debt Service e ett e vial noe .x78 9.1x 7.8x Expense perStudent Revenue perStudent 8.2x Net DebttoAvailable Income hnei e ses1.%1.%5.3% 13.3% 12.2% % ChangeinNetAssets Net Assets Outstanding Equivalents as%ofDebt Total UnrestrictedCash& -All DCOH -Unrestricted DCOH 9.5% Actual DebtService 10.4% Net Income Total 10.2% Expenses Total Revenue Debt Burden-MADS Debt Burden-All Coverage Bond MADS Number ofSchools Investments Total UnrestrictedCash& $15,630,000 $10,212,500 $11,143,503 All DebtDSCR Bond DSCR $491,613,865 Debt Outstanding $2,115,178,947 $2,606,792,812 Bonds Outstanding Enrollment Total DebtOutstanding iaca ercAllRatings Financial Metric n M ed i a s

b y

U nderly 1,1,0 1,8,0 $16,360,000 $10,887,500 $11,515,000 58223$,7,5 $7,531,222 $5,676,954 $5,802,223 13423$,8,5 $728,005 $1,383,757 $1,324,263 12557$,4,8 $1,372,397 $1,248,589 $9,570,996 $1,255,527 $6,596,197 $7,388,642 17713$,1,7 $803,880 $2,016,875 $1,737,123 $732,813 1,8 1,7 $16,337 $14,079 $14,382 i 832$,8 $8,503 $8,186 $8,382 716$,0 $7,229 $7,104 $7,106 17 26 5.8% 12.6% 11.7% 14.0% 11.4% 11.6% .5 .7 1.45x 1.67x 1.65x .1 .3 1.24x 1.53x 1.51x .7 .7 1.56x 1.67x 1.67x n 85$7 $875 $873 $875 824 109 123 64 g

R a t i Investment n $688,480 g Grade C 754 102 112 72 ate g ory Investment $1,031,504 Grade Non- 1,120 94 42 21 43 Current Financial Metrics 44 Current Financial Metrics schools. grade and1.24xfornon-investment 1.53x forinvestmentgradeschools at Thestood ratio medianMADS improved theirAllDebtcoverageratios. FY11, offeringswithsignificantcapitalizedinterestin bond recent which gradeuniversehad inthesmallernon-investment several ofthe21schools that thefact reflecting pronounced, coveragewasmore difference inMADS The gradeschools. fornon-investment and1.45x investment gradeschools The was1.67xfor investmentgradeschools. medianAllDebtratio for debt,was materiallyhigher forbond ratio andtheMADS all borrowings forFY11 for theAllDebtratio coverage,both debtservice Debt service DSCR for investmentgradeschools. at9.1xcomparedto7.8x gradeschools withthenon-investment categories, theratings incomemetricbetween variance inthenetdebttoavailable the $14,079 There medianforinvestmentgradeschools. isalsoalarge hadamedianof$16,337, gradeschools non-investment 16% higherthan ratingcategories; thetwo analysis, agreaterdivergenceexistsbetween theratedandunrateduniversesinearlier significantlybetween vary While thismetricdidnot per studentthaninvestmentgradeschools. alsohadsignificantlyhigherdebt The gradeschools non-investment outstanding was$16.4 comparedto$10.9 million million. to $10.2 andmediandebt fortheinvestmentgradesschools, million outstandingwas$15.6 ofbonds amount compared fortheseschools million The gradeschools. mediandollar higherfornon-investment were 50% outstandinganddebt Medianbonds in largerborrowings. isalsoreflected gradeschools The size ofthenon-investment largerschool Bonds &DebtOutstanding 12.6% comparedto5.8%. gradeschools, thandoublethatofnon-investment wasmore grade schools cash andinvestmentsasapercentageofdebtoutstandingforinvestment was roughly20%higherat112 dayscomparedto94days.The medianfor themedianforinvestment gradeschools -Allmetric,although in theDCOH There difference gradeschools. wasalesspronounced for non-investment was72schools days,approximately70% higherthanthe42daymedian -Unrestrictedmedianforinvestmentgrade theDCOH liquidity, superior this Reflecting gradeschools. fornon-investment compared to$730,000 higher medianfortotalunrestrictedcashandinvestments,$1.4million weresmaller,theyhadasignificantly investmentgradeschools Although Liquidity Ratios the15%above benchmark. debtburdens gradeuniversehadMADS inthenon-investment schools 14.0%schools, comparedto11.4%. of the eight,or38%, Inaddition, grade isconsiderablyhigherforthenon-investment the medianratio debt,however, to 10.4%.forbond annualdebtservice Basedonmaximum 9.5%compared gradeschools, fornon-investment Debt burdenwaslower capitalized interestwasnettedoutofFY11 themedianAll debtservice, The patternvariessomewhatintheanalysisofdebtburden.Because Debt Burden higher thanprojected. growthsignificantly withactual managementorganizations large charter fortheoperatingbudgetitems,primarilyduetoafew aligned, particularly median fallingwithin10% Averages aswell- ofprojections. werenot with allbuttheexpense medianswereinlinewithexpectations, actual performance.Manyofthe basedon actual withthose forma projections forthepro metrics. The comparesmediansandaverages tableabove keyproformabudgetitemsand withFY11 forcertain projections actuals Forthissmallersubset,we comparedproforma pro formaaccuracy. FY11 inorder toassess andactual dataavailable projected we hadboth offeringsforwhich wecomparedasubsetof85 light oftheirimportance, In themasabasisfordebtcoverageandburdencalculations. employ and budgets intermsofthereasonablenesstheirunderlyingassumptions analyzeproforma analysis,underwriters As discussedinthedisclosure C Ov Debt Burden DSCR Debt Service Net Income Total Expenses Total Revenue Enrollment Year Compar OMPAR er vi e

Number of Issues w is 20 25 30 15 10 IS 0 5 on o ON (50 – 74)% (25 –49)% (25 –74)% (50

ANALY f

P ro P ERCEN r omsF1 cul ifrnePoFra Y1Atas%Difference FY11 Actuals Pro Formas %Difference FY11 Actuals Pro Formas Forma 468$5.096 $4.688 102$.5 -3.2% $1.057 $1.092 070$0.708 $0.700 378$.3 12.8% $4.238 $3.758 34 12.7% 13.4% SIS 1.48 675 TA GE P DIFFERENCE ro (11 –24)% Enrollment j e c Median t 1.39 680 i on B s 1–1) 0–10 (1 –10)% ETWEEN

& Ac Revenue t PR ual -5.2% -6.1% 1.1% 8.7% 0.7% O F s performance exceeded projections byasimilarmagnitude. performance exceededprojections actual withotherofferingswhose rangetogether 25-49% in thepositive befound andthatdatapointwould be30% percentage differencewould tototal100was projected enrollmentwas130, the studentsandactual percentageranges.Forexample,ifenrollmentforFY11into various issuesandthentalliedthenumberofofferingsfalling ofthe85 for each figuresandproformaprojections actual percentage differencebetween results difficulttointerpret.Forthefourbudgetitems,wecalculated figures,makingthe comeintoplayin those factors so manycountervailing since withactuals to attemptcompareindividualnetincomeprojections We not pro formas: enrollment, revenue, expenses and debt service. chose includedin operatingbudgetitemsnormally performance forfourprimary withactual projections ofthe85 wealsocomparedeach overview, providesahigh-level While thiscomparison ofmediansandaverages Forma Bud P

f ORM ro or %2 F A PR Expenses Y 11 1 1, 85 I –24% OJECTIONS 1.5 1.3 29.8% $16.031 $12.352 169$1.761 $1.609 965$35540.2% $13.575 $9.685 267$.5 -7.9% $2.456 $2.667 33 12.7% 13.3% 1,421 1.74 ss ue g 5 –49 & ACTUALS FO &ACTUALS et Item Debt Service s

($ inMillions) %5 s Average 0 –74 1,726 1.88 % R FY 11 >75% 21.5% -4.5% 9.5% 8.0% 45 Comparison Analysis 20 25 30 15 10 0 5 46 Comparison Analysis and actual debt service coverage within certain ranges,rangingfromless coveragewithincertain debtservice and actual Theburden ratio. depictsthenumberofissueswithprojected graphbelow andthedebt coverageratio arethedebtservice perspective underwriting ofgreatestsignificancefroman ratios thetwo budget isimportant, predictitsfutureenrollmentand While aschool’s toaccurately ability forrevenues. distribution mirror thedeviation exactly almost fromprojections deviations arecombined,actual service Ifexpensesanddebt oftheissuesfallwithin25%projections. to 80% androughly60% issues fallwithinplusorminustenpercentofprojections ofthe and60% 30% apparent. Dependingonthebudgetitem,between is curve thebellshapeofdistribution Inaddition, for theseschools. dropinenrollment materialize,ratherthananactual growth which didnot enrollment thatprojected differentials wereprimarilyforsmallerschools The withgrowththatexceededearlierpredictions. largernegative networks weregenerallyforlargecharter ormore by50% exceed projections The revenue andexpensesthanprojected. tenofferingsinwhich actuals alsoleadingtohigher magnitudes, withhigherenrollmentthanprojected bysimilar drives theotheritems,allfourtendtodeviatefromprojections sinceenrollment obviously, Several pointsemergefromthisanalysis.Most t D e b t R a i o 2.00x –2.99x 1. 1. 1. 1.00x –1. s 20x –1. 20x –1. 40x –1. 60x 3.00x+ <1.00x 39 59 99 19 x x x x 05 3 3 PR CTED &ACTU OJECTED Pr o FormaFY 8 Number ofIssues 10 10 10 11 performance. actual inferior and nineofthe15rangehaving issuesinthe1.60x-1.99x performance inferior nine ofthe14 rangehaving issuesinthe2.00x-2.99x coverage,with negativechanges inactual more ranges tendedtohave coverage issuesinthehigherprojected performance. Conversely,those rangeatissuance,1.00x-1.19x, actual projection superior lowest having coverage,withsixoftheeightissuesin changes inactual positive more coveragerangestendedtohave projected issuesinthelower those rangeorstayedwithinthesamerange.Asdepicted, toalower decreased rangethatimprovedtoahighercoveragerange, by initialprojection range. The graphonthenextpageillustratespercentageofissues performanceandsomestayedwithinthesamegeneral some hadinferior performance, actual hadsuperior range,someprojections Within each more thanprojected. 1.00x, wassignificantly 1.00x-1.19x categories, two coverageinthelowest andlessthan actual andthenumberofissueswith ranges wassignificantlylessthanprojected, and1.40x-1.59x coverageinthe1.20x-1.39x number ofissueswithactual However,the orabove. coverageof1.60x issueshadactual and 30 coverageinthesehigherranges, issuesprojected Thirty-two and above. coverageinthehigherrangesof1.60x andactual issues withprojected Therethan 1.00xto3.00xorabove. wereroughlythesamenumberof AL 12 FY 11 Actual FY DSCR 14 14 15 15 15 15 11 18 20 21 25 05 10 15 20 25 was greater similarity in the number of projected and actual issueswithin andactual inthenumberofprojected was greatersimilarity There ranges,rangingfromlessthan5%to20%ormore. within certain debtburdens andactual depicts thenumberofissueswithprojected TheA similaranalysisisperformedforthedebtburdenratio. graphbelow 100% 20 40 60 80 0 12% –14.99% 15% –19.99% 10% –11 5% –9.99% 1.00x –1. 20%+ .99% <5% 2 6 05 19 x1 .20x –1.39x.20x C HANGES 4 4 8 9 PR 5 CTED &ACTU OJECTED IN Superior PR 7 Pr 1. CTED DEBTSER OJECTED o FormaFY 40x –1. 40x 8 Number ofIssues Number ofIssues 5 7 6 9 10 59 10 x1 11 AL Same FY schools than projected haddebtburdensunder10%. thanprojected schools debtburdensinexcessof20%andmore hadactual than projected Fewerschools werefavorable. In theaggregate,thesesmallerdeviations coverage. individual rangesfordebtburdenthantherewasservice 11 DEBTBURDEN .60x –1. .60x V Actual FY ICE 9 3 3 99 15 Inferior C .0 .9 3.00x+ 2.00x–2.99x x OVERA 11 16 16 GE 9 5 19 20 20 20 1 2 24 25 47 Comparison Analysis 10 20 40 60 80 0 0 48 Comparison Analysis into theimmediatelyhigherrange. burdenfalling performancewithanactual rangeandonehadinferior lower burdensfallingintotheimmediately performancewithactual had superior range.Inthecaseof10%-11.9%lower range,sevenofnineissues burdenfallingprimarilyintotheimmediately performance, withtheiractual actual the caseof20%+range,seventenissueshadsuperior performancewerethe20%+and10%-11.9%and actual ranges.In projections burden. Therangeswiththegreatestchange between two or thesameactual inferior rangethathadsuperior, by initialprojection an increaseinrange.The illustratesthepercentageofissues graphabove isdefinedas inrangeandinferior isdefinedasadecrease burden, superior However,inthecaseofdebt same generaldebtburdenrangeasprojected. performanceandsomestayedwithinthe performance, somehadinferior actual someofferingshadsuperior coverageratio, As withthedebtservice 100% 20 40 60 80 0 0+1%–1.9 2 49%10% –11 12% –14.99% 15% –19.99% 20%+ 3 7 5 5 6 C HANGES Superior IN PR Number ofIssues 9 6 5 CTED DEBTBURDEN OJECTED Same ranges. withinthedifferent comparedtoprojections ofactuals distribution coverage anddebtburdenfindingsweresimilarintermsofthe within the10% and25%varianceranges.The debtservice percentagesfalling therewereslightlylower maintained, although —was items —enrollment,revenue,expensesanddebtservice significantly shapeofthefourbudget change. not The bellcurve the LatestYear We oftheprojections. foundthatresultsdid smaller universeconsistingonlyofproformasinwhich FY11 was set skewedthefindings,weperformedasimilaranalysisfor Inordertoassesswhetherthisdata timehorizon. their shorter dueto greateraccuracy expect Assuch, wewould projections. forFY11, projections androughlyhalfofthesewereYearof 85 1 Latest Year oftheproformabudgets,therewasalimiteddataset theproformaanalysisgathereddatafromYearBecause 1andthe 1 1 7 9%5 .9 <5% 5%– 9.99% .99% Inferior 13 2 4 2 3 10 20 40 60 80 0 0 2 1 defaulted, representinganoveralldefaultrateof2.7%. ofdebtoriginated,$173terms ofthedollaramount have ofbonds million payments.In fullandtimelydebtservice receive in which investorsdid not default experiencedamonetary have or3.8%oftheportfolio, transactions, throughMay31,2012, facilities school financed charter 22 thathave billion issuancestotaling$6.44 bond Ofthe583derive conclusions. tax-exempt available toanalyzeandfromwhich to significant repaymentperformance issuedtodate,thereis transactions withapproximately600 decade iswellintoitssecond sector bond school charter As thetax-exempt REPAYMENT te ult D wo issues hadratedandunratedseries. wo Non-Investment GradeRating Investment GradeRating Rating Category T Rating atissuance. Total Unrated Issues Rated Issues Charter S e f until thereisamissedpaymenttobondholders. default unlessand capturedasamonetary default, buttheyarenot maysignal aneventual ofacharter, ornon-renewal revocation Other information. defaults,such technical as timely disclosure such asfailuretofile may beunrelatedtorepaymentability, default asthereasonfortechnical our analyticalpurposes beconsideredadefaultfor not default, ontheotherhand,would labeleditadefault.Atechnical forbearance agreement,wehave througha termswithbondholders itsdebtservice renegotiated issuance.Therefore, has agreed toatthetimeofbond ifaschool meet theprincipalandinterestpaymentstoinvestorsthatwere asofMay31,2012, borrower, whose wasunableto transaction definedadefaultasany thatwehave tonote It isimportant a R a c 1 hool Bond

s PER F ORM D AN e ealsTotal Defaults f a C 21 22 1 1 0 ult E R a te Number ofIssues s 301 8 3.8% 7.4% 583 284 257 44 2 school bond issuancepost-2007. bond school number ofissues.There defaultsasofMay31,2012 wereno forcharter in thatyear.Only1999and2001hadhigherdefaultratestermsofthe ofdebtoriginated thenumberandparamount approximately 9%ofboth defaultedissuesrepresent Thesedefaulted debt,$52million. five2006 of five,aswellthehighestparamount of defaultedtransactions, thehighestnumber issuancehaving subsequently defaulted,with2006 1999 and2007, originatedannually bonds school charter two onaverage, originatedinthesector’s firstyear,defaulted.Between bonds school 1998, ofthecharter page,none As illustratedbythegraphonfollowing market. throughthetax-exempt fromborrowing position orfinancial academic inastrongenough thatarenot and preventschools couldreducethispercentageconsiderably andunderwriting in disclosure ofbestpractices par originated.However,aswillbediscussed,adoption higher defaultrateof7.4% intermsofthenumberissuesand8.3% emerges.The 21defaultsforunratedissuesrepresentasignificantly story complicated amore bonds, school For theunrateduniverseofcharter and 0.1%intermsofparoriginated. issues representsadefaultrateof0.3%intermsthenumber investment graderatingof“Ba1” fromMoody’s. This singledefaultforrated rating atissuance,andonlyone,a2000Michigan offering,hadanon- issueswasassignedaninvestmentgrade None ofthe22defaultedbond themarketonanunratedbasis. thataccessed grade, atissuanceandthose that wereassignedarating,eitherinvestmentgradeornon-investment transactions between In termsofdefaultrates,thereisacleardistinction ult D 0.3% 2.3% 0.0% Rate e f a s

b y I ss ealsTtlRate Total Defaults 126 6414 2.7% 8.3% $6,441.4 $2,058.6 $172.6 $170.1 26 4328 0.1% $4,382.8 $2.6 00 3679 0.0% $3,697.9 $0.0 26 649 0.4% $684.9 $2.6 uan c e Y Par inMillions e ar 49 Repayment Performance 50 Repayment Performance default. Of the nine states, four had a single default: Florida, NewMexico, default. Oftheninestates,fourhadasingledefault:Florida, school experiencedatleastonecharter have jurisdictions Nine ofthe30 higher defaultrates. todetermineifanystateshadsignificantly withdefaultedbonds associated oftheschools oforiginateddebt.We billion analyzedthelocation $6.44 ofthe for52%ofthe583 issuancesand59% bond — accounting Michigan andTexas withfourstates—Arizona,Colorado, jurisdictions, of Columbia.Thethese30 ofissuancevariesgreatlyamong volume beenissuedin29statesandtheDistrict have bonds school Charter lt D e f au Par Amount $60 20 30 40 50 100% 10 0 s 20 40 60 80

0 b y 1 State 998 0 AZ 86 3 1 999 5$ $1 $3 $5 2 CO 733 97 3 DEF 2000 AU DEF 1 LT FL 1 AU ED C LT HAR ED 20 3 01 6$ ISSUES 10 IM NM MN MI 6 TER SCHOOL TER a mutNumberofIssues Par Amount 42 Non-Defaulted 20 AS ($ inMillions) 222 02 9$ P 4 6 ERCEN BONDS defaulting issue representing 3% of both the number and par amount of thenumberandparamount defaulting issuerepresenting3%ofboth withthe million, Florida’s issuestotaled$663 bond school 34charter ofthetotal. staterepresentsamuch smallerportion ineach transaction bond issuance, andthesingledefaulted school hadsignificant charter have andTexas Florida defaulted.Incontrast,both bonds issued tax-exempt thathave schools charter state. Similarly,inWisconsin, oneofonlytwo issueinthe bond school Mexico, thedefaultedissuewasonlycharter state.InthecaseofNew differing percentagesoftotalissuanceforeach Texas andWisconsin. However,thissingledefaultrepresentswidely 20 14 03 TA 1 BY GE OF YEAR Defaulted 20 TOT 1 3 5 $27 $52 $34 $12 04 YTX NY OF 2 74 AL ISSU BY 052006 2005 STATE 3 AN 1 1 5 CE 5 WI 1 2007 2 Other 16 2

0 1 2 3 4 5 6 Number of Issues of Number 10 20 40 60 80 0 0 20 30 40 50 60 10 0 0 1 2 3 4 5 6 burdens, particularly in the early years before stabilization ofenrollmentand intheearlyyearsbeforestabilization burdens, particularly offunds,8%comparedto7%,andhadhigherdebt at ahighercost to 554 foroutstandingissuances.The alsoborrowed defaultedschools issuances. Medianenrollmentatissuancewas247 studentscompared was4.6yearscomparedto6.3fortheoutstanding schools offunds.Medianageatissuanceforthedefaulted relatively highcost ata thatborrowed smallerschools isoneofgenerallyyounger, below The thatemergesfromthecomparison pictureofthedefaultedschools creditweaknessesthatcontributedtosubsequentdefault. possible atIssuance”analysishighlights included inthe“CreditCharacteristics outstandingissues oftheapproximately400 defaulted issueswiththose atissuanceforthe22 However, acomparisonofthecreditcharacteristics inAppendixE. circumstances, andweincludegreaterdetailforeach haditsownunique ofthe22schools each For thedefaultedtransactions, significant issuance,such asUtah, Pennsylvania, CaliforniaandIllinois. includingstateswithfairly intheremaining21jurisdictions, $2.04 billion There defaultsonthe162 wereno issuancestotaling bond school charter 3% to6%ofthenumberissuesand4%paroriginated. issuance,haddefaultratesrangingbetween bond school greater charter andMichigan, stateswithsignificantly the paroriginated.Arizona,Colorado represent13% of$23million, amount ofthenumberissuesand10% of 20% basedonparissued.Minnesota’s witha par fourdefaultingbonds, andalmost a defaultrateof22%basedonthenumbertransactions thehighestdefaultrates.NewYork’sissuances have defaultsrepresent two stateswiththefewest two Of theremainingfivestateswithdefaults, issue representing2%ofthenumberissuesandlessthan1%par. withthedefaulting million, issuance. Texas’ totaled$865 transactions 46 Chara Cred Waitlist Enrollment Age School All-In Cost Par Millions Variable Debt BurdenYear 1 YearDSCR 1 Debt BurdenLatestYear LatestYearDSCR Chara Cred i t i t c c t t er er is is t t ics ics a t I ss uan c e, eale Outstanding Defaulted $6.868 14.2% 14.2% D 7.8% 28% 1.53 1.55 247 4.6 e f a ulted & Median 32%, occurring pastthefive-yearoutstandingmark. 32%, occurring withinfiveyearsofissuance,withonlyseven,ortheremaining occurred orfifthyearafterissuance.Intotal in thefourth 68%, ofthedefaults 15, or six,or27%, withinthreeyearsofissuanceandanother occurred occurred the medianis3.9years.Surprisingly,ninedefaults,or41%oftotal, to12 rangesfromsixmonths to default.While thistimeperiod years, contributing todiscernotherpotentialfactors date forthe22transactions We thedateofissuanceanddefault analyzedthetimelapsebetween median waitlistof28%comparedto37% fortheoutstandingissues. percentageofwaitlistedstudents,asindicatedbya that hadalower schools revenues.The wereallstand-alone associated defaultedschools Ti O ut me Bet structure. ofthebond aspart includedaninterceptmechanism transactions open andduestatefunds.Approximatelyhalfofthe22defaulted is iftheschool isonlyavailable asthemechanism bonds school withcharter mitigatethefundamentalrisksassociated do not orinterrupted.However,they districtsisslowed due fromschool usefulwhenperpupilrevenue expenses, andtheyareparticularly toother ispaidprior astheyensurethatdebtservice perspective These interceptscanbebeneficialtoinvestorsfromacashflow trusteeratherthantheschool. tothebond revenue —directly orapercentageoftheschool’s debtservice equal toperiodic school’s ofthecharter a portion perpupilrevenue—usually wherebythestatesends jurisdictions incertain feature available security State bond school areacharter interceptmechanisms $8.465 13.4% 12.5% 6.9% s 37% 1.53 1.51 554 6.3 t and w i n een g Bond I ss uan I ss eale Outstanding Defaulted $7.846 13.8% 13.7% c 7.9% 54% 1.69 1.82 ue 313 4.2 e & s D e Average f a ult $11.988 13.5% 12.5% 7.0% 68% 1.69 1.84 907 6.7 51 Repayment Performance 52 Repayment Performance

Number of Issues 10 outstanding issues. of onwaitlistcompared to59% containedinformation offering documents 3.53 fortheoutstandingissues.Similarly, only32%ofthedefaulted for thedefaultedissuescomparedto metricof2.36 academic average lower to 84%oftheoutstandingissues,contributingasignificantly performancecompared defaulted issuescontaineddataonacademic Only55% wasinferior. performance dataandwaitlistinformation, ofthe intermsofacademic indicators,both quality for academic disclosure age,enrollmentandproforma budgets.However, statements, school offinancial ofthe outstandingissuesintermsofinclusion to those levelsforthedefaultedissuesweresimilar As canbeseen,disclosure of thepercentageissuescontainingdifferentitems. tabledetailstheselevelsinterms analysis.The accompanying Disclosure” in includedinthe“BestPractices outstandingtransactions roughly 400 levelsforthe22defaultedissueswiththatof We compareddisclosure paymentfrompledgedrevenuesandthetimeofdefault. of debtservice commencement between reducingthetimeperiod further least sixmonths, 19 ofthe22defaultedofferingsbenefitedfromcapitalizedinterestforat that isthefact Underscoringthispointfurther missing ormisunderstood. waseither information after issuancesuggeststhatsomeunderwriting The offeringswhich defaultedsoshortly school highpercentageofcharter thatdefaultedafterthefive-yearmark. students fortheschools to further threeandfiveyearsafterissuance,decreasing between 276 defaulting studentsfortheschools to289 with themediandecreasing defaulted earliestalsohadthehighestmedianenrollmentatissuance,358, medianage,3.7years.The whichdefaulted latesthadthelowest schools which highest medianageatissuance,4.7years,andthesevenschools which defaultedearliesthadthe the defaulteduniverse,nineschools atissuance.Within related totheageandsizeofdefaultingschools issuanceanddefaultappearsinversely Interestingly, thetimelapsebetween Disc 0 2 4 6 8 lo <3 Years s 4.7 ure Compar 9 TI ME B MEDIAN ubro susAverage Age Number ofIssues ETWEEN AGES 3 –5Years ISSU is 4.1 on 67 OF A NCE SCHOOL &DEFA S UL >5 Years T 3.7

0 1 2 3 4 5 Years obligations. ortheschool’s tocontinue meetingitsdebtservice for quality ability not areliableindicator renewalwas record, andfinancial track academic assesstheschool’s ortheauthorizer’s failure toaccurately operating history ofinsufficient atthetime.Inthese tencases,eitherbecause history theotherhalfhad atleastfiveyearsof at thetimeofrenewal;however, hadonlythreeyearsofoperatinghistory schools Half ofthesereauthorized issuance. tobond prior renewalsfromtheirauthorizers charter one ormore the defaultedissues.Ten, hadobtained ofthedefaultingschools or45%, areliableindicatorfor renewalwasnot thisinitialtermvariability, Beyond intheseeightcases. possible not eightand15between was years.Useofrenewalasanindicatorforquality withatermranging total defaults,wereoperatingunderaninitialcharter of terms.However,theremainingeight,or36% charter renewed 30-year toissuanceandwereoperatingunder renewalprior charter had received bond issuance. thanfiveyearsatthetimeof more Three oftheseschools of wereoperatingundercharters Elevenofthe22schools authorizations. intheterm ofinitialcharter duetovariability asawhole for thesector aconsistent indicator analysis,renewalisnot discussed inthedisclosure health.However,as andoverallschool quality an indicatorofacademic renewalas relied oncharter andinvestorshave Historically, underwriters defaultcauses. different primary citing toissuanceaswellthepercentageofschools renewal prior charter thatreceived termandthenumberofschools the samecharter with Italsoincludesthemedianageatissuanceforschools schools. years,forthe22defaulting oneyearand30 at issuance,rangingbetween The22 defaultingschools. terms onthenextpagedetailscharter chart atthetimeofissuancefor renewalhistory Finally, weexaminedcharter Charter Statu Average AcademicMetric Academic Data Pro Formas Waitlist Information Enrollment Age School Financial Statements Item D Disc e f a ulted & lo s ure at I O ut s

ss s & t and uan R ea i c s n e on eale Outstanding Defaulted g

100% 100% Bond 86% 32% 55% 77% 2.36 s

f or I

D ss e f ue a ult s 100% 98% 59% 84% 82% 95% 3.53 1 1 12 15 350 450 050 30 60 750 90 15 00 00 0 0 0 0 0 10 0 2 4 6 8 0 1 2 3 4 5 obligations in theformofrenttotrustee. obligations takenonthedebtservice thathave schools bysubstitute charter occupied now — are bondholders were financed—andrepresentthe collateral for that thefacilities however, closed; markethave thebond that accessed toinvestors.Inthreeothercases,theoriginalschools netproceeds forward inorderto property sale orrentalofthemortgaged the trusteeisawaiting as sixtransactions isstillpendingonanother Final paymentresolution available. percentages werenot recovery werecancelledbutactual cases,the bonds the remainingtwo of18%from alow of55%. toahighof70%, In withaweighted average insixofthecasesranging recovery on andsold,withultimatebondholder beenforeclosed have facilities Eightschool continues toberelativelylow. outstanding asapercentageofbonds tobondholders Generally, recovery refunded. andpartially unwound were issuance,andthebonds approvalfortheinitialbond obtain authorizer failedto payments.Intheother,school current onitsdebtservice now is school financial hardship.Despitethesecashflowdifficulties,the immediatelyfound,creating tenantwasnot andareplacement relocated which eventually school toanother essentially co-leasedincubatorspace Inone,thedefaultingschool defaults, or9%,representuniquesituations. revenuesandfinancialdifficulties.two by declining Theremaining performance wasaccompanied academic allofthesecases,poor virtually In inthedeclines. acontributing factor possibly reputation academic 18%, reason,withtheschool’s enrollmentastheprimary citeddeclining fourdefaults,or Another at leasttheyearinwhich thedefaultoccurred. performance,includingfailure tomakeAYPfor academic topoor directly causeofdefault.Sixteen,or73%, ofthe22defaultswerelinked primary wasthe quality sub-paracademic renewalhistory, Regardless ofcharter y R All YearsThirty Fifteen Years Ten Years Eight Years Five Years Three Years One Year Term atIssuance Charter e c o v er T erm & R ene fShosMedianAge # ofSchools w a 22 l 3 5 2 1 6 4 1 His t ory 4.6 6.6 5.4 4.5 2.3 4.0 4.1 5.1 # ofSchools eee cdmcErlmn Other Enrollment Academic Renewed replenish the debt service reserve fund. reserve replenish thedebtservice 2012, theonlyremainingdefaultonthisissuewasschool’s failureto payments. AsofAugust23, currentonitsdebtservice isnow the school 2013, untilJune30, forbearance cases,whiletheagreementiseffective principal andinterestpaymentscanresumeinfull.Inoneofthese thattheschool’sin thehopes cashflowswillimprovetothepointwhere alteredtheschool’sagreements inwhich theyhave repaymentschedule have enteredintoforbearance bondholders In thefinalfivecases, 10 3 0 0 0 3 3 1 STATUS OF For SaleorRent Building Same School; Forebearance 27% 100% 100% 73% (6) 80% 50% 50% 0% 0% 23% (5) DEF Primary Cited DefaultReason Number ofIssues AU LT ED Replacement 100% 18% TRAN 50% 20% 25% 0% 0% 0% School 14% (3) Bonds Canceled Building Sold; IONS SACT 36% (8) 100% 25% 9% 0% 0% 0% 0% 0% 53 Repayment Performance 54 Repayment Performance charter, the bonds are in technical default. areintechnical thebonds charter, duetotheabsence ofavalid fund);however, the trusteeinconstruction ofwhich arestillheldby (two-thirds torepaytheoutstandingbonds ability onJuly1,2012.private, independentschool FSAhasstatedthatitthe a itbecame was alsodenied.FSAisstillopenandoperating;however, charter Asubsequentrequestforastate-authorized renewal application. in Series2011 districtdenieditscharter school thelocal revenuebonds, Just sevenweeksafterFultonScienceAcademy(FSA)issued$18.9 million Fulton ScienceAcademy approval. charter local togain Aspirehasstatedthatitisconfident ofitsability Aspire schools. 2010financed bya$93.3million fornine bond issuethatfundedfacilities fiveofwhich were sixschools, itwillbeforcedtoclose districts; otherwise, school given AspireuntilJune2013 fromlocal authorization togaincharter by theState The BoardofEducation. sidedwiththeplaintiffsandhas court oftheStatewide grantedtoAspire challenged BenefitCharter thelegality California Teachers againstAspirePublic (Aspire) Association Schools andthe BoardsAssociation broughtbytheCaliforniaSchool A lawsuit Aspire Public Schools obligations. meet itsdebtservice willcontinueto thatCCCS and,therefore,itisexpected toCCCS favorable resolvedinamanner wasrecently (CCCS), School Charter Community Chester Oneofthecases,involving which aredetailedbelow. transactions, mid-term future.Includedinthese“troubled”creditsarethreehigh-profile paymentsinthenear-to cases, theremayberealpotentialformissedbond Inother and/orfinancialtrack. academic positive onamore to getback willbeable Insomecases, schools debtservice. arrears withnon-bond wasin ortheschool existedwithundeterminedramifications; lawsuits outstanding withitsauthorizer; wasonprobation included: theschool concern” languageintheschool’s financials. Other sourcesofstress wasthatauditorsincluded“going reasonforthiscategorization common its charter. most losing The of was eitherfinanciallystrainedorinjeopardy as“troubled,”i.e.,theschool We transactions severaladditional categorized enhancement builtintotheissuestructure. ofcredit because tobondholders loss interest payments,buttherewasno failedtomakefullandtimelyprincipal othercases,schools the two payments.In andassumedthedebtservice intothefacility moved school charter case,another ineach however, wereforcedtoclose; schools Fiveofthese bondholders. to loss no payment difficulties, buttherewas experienced inwhich schools we identifiedsevenothertransactions defaulted, thathave transactions bond school tothe22charter In addition Cred N on- M i t onetary s D e f a ult s

& O t her T rou b led information on academic performance. onacademic information containedno fordefaultedtransactions half oftheofferingdocuments almost inthecaseofdefaultedissues.Infact, was inferior disclosure thatacademic levels forthedefaultedandoutstandingissuesshows Acomparisonofdisclosure during underwriting. missing ormisunderstood waseither ofrelevantinformation issuance impliesthatsomekeypiece thatroughly70%The defaultedwithinfiveyearsof oftheschools fact unrated. theirdebtis weakercreditsbecause necessarily basis, andtheyarenot toissueonanunrated chose Similarly, someofthelarger,olderschools andbudgets. programs theiracademic small, successfullymanagingboth toremain thatchose schools wereestablishedstand-alone grade schools manyof the smaller,investment despitetheirsize.Infact, other factors ratings fortheirofferings.They of representedsolidcreditsbecause studentsatissuancewereassignedinvestmentgrade and499 250 withsmallerenrollmentsbetween ofschools weakness. Onequarter implycredit necessarily meanbetterandunrateddoesnot necessarily biggerdoesnot However, asdetailedinthecreditanalysisdiscussion, addedstrainontheirbudgets. and higherdebtburdens,which placed costs theyhadhigherborrowing Equallyimportant, performing schools. waitliststhanthe shorter andhave tended tobesmaller,younger themunicipalmarket.Defaultedschools accessed thathave schools criteriawhencomparedtotheentireuniverseofcharter underwriting forcertain creditcharacteristics generallyhadbelow-average schools issues,itisclearthatthedefaulting In reviewingthe22defaultedbond Chester, andhas$57.4 ofoutstandingbonds. million of intheCity population ofthepublicschool students, approximately60% than3,000 more serves CCCS alloutstandingpaymentstoCCCS. forward topayitsvendorsand CUSD entered intoanagreementwhich allowed andtheCommonwealth handle thecaseadministratively.Ultimately,CUSD to ofEducation deniedtherequestandinsteadorderedSecretary courts statefunding,the fordirect districtandallow school to bypassthelocal dollars tochange theflowoffundseducation to theCommonwealth payments ofapproximately$7.5 appealed While CCCS toCCCS. million which hadfailedtomake District(CUSD), of theChesterUplandSchool student demand.The sourceofthisstrainwasthedirefinancialcondition andhigh academic history struggledfinanciallydespiteitssound (CCCS), Pennsylvania’s School Charter ChesterCommunity school, largestcharter Chester CommunityCharterSchool R e vi e w superior repayment performance for the sector asawhole. repaymentperformanceforthesector superior offeringsandresultin bond school componentofcharter underwriting asakey evaluateacademics andinvestorstodirectly underwriters willenable disclosure terms.Morestandardizedacademic initial charter withlonger injurisdictions alsobeextremelyvaluable,particularly would such which evaluations, produce performance,forauthorizers academic reviewsofschool ofinterimauthorizer state scoresiscritical.Inclusion performance onstatestandardizedtestswithcomparisontodistrictor standardized form,includingmultipleyearsofaschool’s disaggregated datainamore ofacademic toissuance.Disclosure renewalprior charter hadreceived tenoftheschools atthetimeofdefaultandanother longer ofeightyearsor wereoperatingunderinitialcharters defaulted schools Eightofthe inthe22defaultedtransactions. orrepaymentability quality aconsistentorreliableindicatorofacademic renewalwasnot Charter cause. was citedasaprimary 18% enrollment and another linkedasdeclining beenindirectly mayhave revealed that73% linkedtosubparacademics, ofthedefaultsweredirectly Ourresearch intothedefaultedissuances of,thiskeyfactor. disclosure ameasurefor,and toassesscreditstrengthorriskwithout It isimpossible renewal. Itdrivesenrollment,financialstrengthand charter underwriting. school incharter Academic performanceisafundamentalfactor 55 Repayment Performance 56 Issuance And Pricing Update 1 highlight differencesstemmingfromthisfactor. inorderto segregatedintoratedandunratedcategories analysis isfurther for 2011 and2012 andpricingvariables.The withseveralcost together Thegreater than$25million. summarizesannualissuance tablebelow paramounts sevenhaving andanadditional million $50 above amounts par issuanceshaving school charter withthreerecent continued, however, issuesizes The issuancesandlargeraverage trendtowardlargerbond million. far in2012, approximate2011 should origination levelsofroughly$800 thus year.Givenactivity issuedfromtheprior intheparamount reduction inthenumberofissuesanda16% experiencinga31%reduction activity from2010 itrepresentsadecline and2009, with2011 volume, in 2008 levelsofactivity fromthelow continuestorebound this issuancevolume $14.2 wereissued.While andaveraging million, million totaling $340 wereissued.AsofMay31,2012,million, 24transactions, anadditional $15.7 andaveraging million totalingjustover$800 transactions, bond were issuedonafixed-ratebasis.In2011, school charter 51 tax-exempt totaling$1.14 transaction Allbutone$6.6million billion. transactions During this17-month bond school charter therewere75 tax-exempt period, repetition. to avoid containedinVolumeprimarily provideupdatestotheinformation 1inorder sector’s 15-year we however, oftheanalysiswhich follows; aspart history of2012.months forthe Weincludecumulativeinformation occasionally 2010. We providehereupdateddataforissuancein2011 andthefirstfive offeringsthroughyear-end bond school charter pricing datafortax-exempt and Volume cost BondIssuanceprovidedorigination, School 1ofCharter ISS Ov 2011 Year 2012 All hrough May31,2012. T a Av Unrated Rated Unrated Rated Unrated Rated er er 1 UAN vi g e C w e E A

nnu AND Issues alCo # of

51 5$,4. 76%46%18%71%72%3128.7 341 7.23% 7.17% 1.81% 4.67% 7.60% $1,140.5 75 4$4. 69%52%17%65%65%3627.7 346 6.57% 6.55% 1.77% 5.23% 6.94% $340.3 24 39 0$2. 79%48%20%74%7.46% 7.42% 2.00% 4.84% 7.90% $225.3 20 55 16 12 PR 7. 73%48%20%70%70%4822.2 428 7.01% 7.01% 2.02% 4.85% 7.34% $79.5 8 ICI s t N & Millions G 802 .1 .0 .3 .7 .4 3 29.1 339 7.54% 7.47% 1.83% 4.40% 7.91% $800.2 644 .1 .8 .8 .0 .7 2 29.5 323 7.47% 7.40% 1.78% 4.28% 7.81% $654.4 208 .7 .3 .5 .2 6.35% 6.32% 1.65% 5.43% 6.77% $260.8 158 .4 .3 .8 .2 7.79% 7.72% 1.98% 4.83% 8.34% $145.8 Par 952 .1 .0 .4 .9 7.15% 7.09% 1.74% 4.60% 7.51% $915.2 P UPDATE r ici n g

Var All-In Cost i a b le s , 2011 & 2012 COI expenses continued to decline for charter schools in2011 schools forcharter expenses continuedtodecline and2012; costs 2007 andfelltothe5%6%rangebetween and2010.and 2006 These 1999 inthe6.5%to7%rangebetween Average ofissuancehovered costs toinvestors. tostructure,priceandmarketbonds paid totheunderwriter fees—thefee including legalfees,trusteeratingfeesandunderwriter themunicipalmarket, inordertoaccess costs mustbearcertain schools charter paysforitsborrowing, school totheinterestacharter In addition 2012, asillustratedbythegraphonnextpage. monthsof originatedduringthefirstfive basis pointsforeighttransactions of428 anevenwiderspread,withaverage faced however, transactions, 2011 narrowedslightlybetween for ratedtransactions and2012. Unrated The newsisthat spreads forthistimeperiod. positive asawhole sector of341basispointsforthe resultinginacombinedaverage respectively, MMD, of319basispointsabove priced anaverage basispointsand408 highs overthepast17 issues bond Ratedandunratedcharter months. narrowingsomewhatin2010;2009, spreadswidenedtosector however, peakedin Spreadshadpreviously ratedbonds. andlower municipal bonds rate highlyrated,triple-A differential measuredinbasis points between theinterest This ofcapitalismeasuredbythespreadtoMMD, cost was 7.46%. termof25.6years,theaverage average which hadashorter transactions, was7.15%. years,theaverage 30 termofalmost average Forunrated 28.7years,was7.23%.which averaged withan Forratedtransactions, longest maturity, bond withthe bond yieldontheterm fixed-rate average Overthe17-month borrowings. rates ontheirtax-exempt the period, In 2011 and2012, continuedtopayrelativelyhighinterest schools charter UD opnYield Coupon MMD+ MMD+ (bps) 408 395 319 310 (Years) Term 30.4 25.6 29.8 27.8 the first five monthsof2012the firstfive inthe primarilyduetoasignificantreduction remainedhistoricallyhighin2011, costs While borrowing in theydeclined was7.51%, All-InCost average itwas7.90%. andforunrated transactions 7.60% averaged bonds forthe17-month the Forratedtransactions, period. The for fixed-rate school issuance expense into charter account. All-In Cost interestexpenseand takeboth orAll-InCosts, costs, Overall borrowing expenses asapercentageofpar. average lower issuances having withonly2008 forthesector, historic lows to discountof1.81%.These areclose underwriter’s costs an average 4.67% ofofferings,including of issuanceaveraged oftheparamount 250 350 450 20 30 40 15 11 10 50 10 % 0 0 0 0 0 0 5 6 7 8 9 1 1 998 998 1 1 999 999 2000 2000 20 20 01 01 AV 20 ER 20 AV Unrated Issues 02 02 AGE A AGE ER AGE A AGE 20 20 03 NNU 03 All NNU AL 20 20 04 SP 04 (Basis Points) AL ALL-I R EAD Rated All Issues the sector’s 15-year history. over transactions school forrated,unratedandallcharter costs borrowing annual average shows thegraphbelow inperspective, costs borrowing atlessthan6.5%.To borrowing sixschools and anadditional putrecent of2012, quarter second under5.5% borrowing schools withthreecharter significantlyinthe Ratesdecreased despite higherspreadstoMMD. from8.34%in2011 declined for unratedtransactions to7.34% in2012, from7.81%declined in2011 to6.77% in2012, All-InCosts andaverage transactions school forratedcharter All-InCosts As aresult,average in 2011, of3.27% butfelltoanaverage monthsof2012. overthefirstfive 4.23% averaged triple-AMMD Municipal MarketDataIndex.The 30-year TOMMD,1 N COS 20062005 20062005 T, 1 2007 998–20 2007 Unrated 998–20 Rated Issues 12 12 20092008 20092008 20 20 10 10 20 20 11 11 20 20 12 12 57 Issuance And Pricing Update 450 350 250 40 30 20 15 10 50 11 10 0 0 0 0 0 0 5 6 7 8 9 58 Issuance And Pricing Update support theCity’s ThesebytheCity’ssupport aresecured schools. charter bonds issued$17.7Coral inFlorida to revenuebonds obligation inspecial million enhancement thatresultedinratingsof“A” ofCape orhigher.The City Twograde ratingsinthedouble-Bcategory. offerings benefitedfromcredit 13 andone-quarter, offerings,wereassignedbelow-investment category, issuance,41offerings,wereassignedratingsinthetriple-B bond school ofratedcharter approximatelythree-quarters below, inthechart As shown million. issuesizeof$11.3 andanaverage of$225million had atotalparamount $915 issue size of $16.6 and an average million The million. unrated issues ratings and20wereunrated.The of ratedissueshadatotalparamount issued.Ofthe75 oftheparamount issues,55and 80% wereissuedwith highof73%rated offeringsrepresentingasector ofthenumberissues The trendtowardratedissuancecontinuedoverthe17-month with period, R at i n 1 ond issue had two serieswithdifferentratings. ond issuehadtwo One b Par Amount g $500 20 30 40 10 0 0 0 0 0 +A3A A+/Aa3 $18 111 $3 C HAR TER SCHOOL TER BBB $26 + a mutNumberofIssues Par Amount BOND $1 B BBB BBB 8 80 ISSU ($ inMillions) A when rateshaddeclined. issueswereoriginatedinMay2012, ofthethree“BB/Ba2” two because higher rating categories of the two for each than the average issues is lower bond forthethree“BB/Ba2” Forexample,theaverage rating categories. forindividual number ofissuancesormarkettimingskewedtheaverages 7.90%. forunrateddebtaveraged All-In Costs Inseveralcases,asmall was8.04%. theaverage For thenextlargestratingcategory,“BB+/Ba1,” was 7.67%. All-In Cost theaverage Baa3” rated issues, thelargest category, ofCapeCoral’s of5.64%fortheCity For“BBB-/ with alow revenuebonds. highlyratedissuances, forthemore arelower All-InCosts As expected, State’s pledge. obligation moral offeringthatbenefitedfromthe bond school charter series ofaColorado S&P and“Aa3” byMoody’s. The otherenhanced“A” ratingwasforone revenuesandwererated“A+” valorem ofnon-ad annual appropriation by NCE $462 BY 32 -B ING RAT 1 , 20 $1 10 B+ 80 11 &20 12 $47 BB 3 Unrated $225 20

0 7 14 21 28 35 Number of Issues of Number 20 30 40 50 10 21 28 35 14 0 0 0 0 0 0 0 7 combination issues averaged All-In Costs of7.60%. All-InCosts issuesaveraged combination of7.63%, All-InCosts issuesaveraged New money andtheseven ofthethreewereissuedin2012term, andtwo whenrateshaddeclined. ofissuance.These average costs issueshadtheshortest higher average forthethreerefundingissues,6.91%,despite werelowest All-In Costs andrefundingissues. newmoney combination issuesand9%were bond 4%wererefundingsofprior purposes, money in2011schools monthsof2012, andthefirstfive 87%werefornew beenissuedby,oronbehalfof,charter Of the75 offeringsthathave bond 1 Us Term A+/Aa3 Rating B+Ba 2. 61%28%11%57%60%2129.7 221 6.00% 5.75% 1.15% 2.82% 6.12% $26.5 Rated BB/Ba2 1 BBB/Baa2 BBB+/Baa1 A/A2 B-Ba 2$6. 76%50%18%72%72%3329.5 333 7.26% 7.21% 1.82% 5.05% 7.67% $462.0 32 BB+/Ba1 BBB-/Baa3 All Unrated All Combination Refunding New Money

pro-rated for these two series based on their par amounts and used to calculate the All-In Cost for each seriesinthetableabove. foreach andusedtocalculatetheAll-InCost seriesbasedontheirparamounts pro-rated forthesetwo One offeringhadt a Av a Av e o er er 1 f

g g P e Co e Co ro wo serieswithdifferentratings.SeriesAhadan“A”wo are ratingbased ontheschool’s andUD credit.COI ratingbasedonColorado’s pledgeandSeriesBhada“BBB-” obligation moral c s s eed t t Issues Issues and A # of # of 55 20 5$,4. 76%46%18%71%72%3128.7 341 7.23% 7.17% 1.81% 4.67% 7.60% $1,140.5 75 5$,4. 76%46%18%71%72%3128.7 341 7.23% 7.17% 1.81% 4.67% 7.60% $1,140.5 75 10 65 s nd 1. 56%11%05%60%6.12% 6.00% 0.53% 1.11% 5.64% $17.7 1 4. 75%39%18%71%72%3130.0 381 7.29% 7.17% 6.44% 1.83% 6.50% 6.35% 3.93% 6.50% 1.53% 7.58% 1.50% 3.62% $46.6 3.75% 6.68% 3 6.75% $179.7 $2.5 8 1 8. 76%43%20%71%72%3225.2 20.8 382 304 7.22% 6.40% 7.19% 6.33% 2.06% 1.96% 4.34% 5.67% 7.60% 6.91% $84.0 $10.4 7 3

P P r r ici ici Millions Millions 1061 .3 .5 .8 .1 .7 3 29.4 338 7.27% 7.21% 1.78% 4.65% 7.63% $1,046.1 253 .0 .4 .0 .2 7.46% 7.42% 2.00% 4.84% 7.90% $225.3 952 .1 .0 .4 .9 7.15% 7.09% 1.74% 4.60% 7.51% $915.2 n n Par Par 102 .4 .7 .4 .9 7.61% 7.59% 1.84% 4.77% 8.04% $180.2 g g V V ar ar i i a a b b All-In All-In Cost Cost le le s s

b b y y

Us R a COI % COI t e o i n f g

, P 2011 & 2012 ro c D%Cuo Yield Coupon % UD eed UD Refunding 4% (3) s , 2011 & 2012 NUMBER opnYield Coupon OF Combination ISSUES 9% (7) 20 11 BY &20 USE 12 New Money MMD+ MMD+ MMD+ MMD+ OF (bps) (bps) 408 319 350 258 142 170 87% (65) P ROCEEDS (Years) (Years) Term Term 25.6 29.8 30.3 29.3 31.9 29.7 59 Issuance And Pricing Update 60 Issuance And Pricing Update offerings, Texas debt,driven school ofcharter hadthelargestparamount andpricingdata.While Arizonahadthemost withcost together period, in all19 offeringsoverthe17-month bond school statesthathadcharter The ofissuances tableonthenextpagelistsnumberandparamount issuances, or24%ofthetotal. 11additional fortheremaining18 statesaccounted bond school charter for21issuances,or28%ofthetotal. An and Pennsylvania —accounted offerings—California,Utah,Florida bond school charter with fourormore Fourotherstateseach halfofallissuanceduringthisperiod. or almost Arizona, Texas, transactions, for36 accounted Michigan andColorado Of the19 issuancein2011 bond school withcharter jurisdictions and2012, 1 2012 whenrateshadfallen. thatasignificantlyhigherpercentagewereissuedin range duetothefact 7.49%, All-InCost, average years hadalower Year thanissuesinthe26-30 Yearin the26-30 range.The than30 26offeringswithtermsofmore three offeringsinthe4-6Year rangetoahighof7.83% forthe42issues of6.26%forthe Average rangedfromalow and All-InCosts. All-InCosts higherinterestrates termshave offeringswithlonger range. Asexpected, andpricingvariablesbymaturity cost The summarizesaverage tablebelow issue. issuesandonewasacombination termswerenewmoney with short oftheseofferings fourandsixyears.Surprisingly,two terms ofbetween 18 7%hadtermsofbetween Another longer. and25years,4%had issuancesof26yearsor werelong-term 89%, offerings duringthisperiod, bond school ofcharter thevastmajority In keepingwiththesector’s history, State Bond Term 6–3 er 2$6. 78%47%18%73%74%3329.7 343 7.45% 6.66% 7.38% 6.63% 1.81% 1.78% 4.74% 4.34% 7.83% 7.05% $666.6 $25.2 42 All 5 Years>30 Years 26 –30 18 –25Years 4 –6Years ond offering had two serieswithdifferentterms. ond offeringhadtwo One b a Av 1 er T g erm e Co s t Issues and # of 5$,4. 76%46%18%71%72%3128.7 341 7.23% 7.17% 1.81% 4.67% 7.60% $1,140.5 75 6$2. 74%48%18%71%71%3331.4 333 7.17% 7.13% 1.89% 4.87% 7.49% $420.1 26 2. 62%23%11%56%5.60% 5.60% 1.12% 2.36% 6.26% $28.7 3 P r ici Millions n Par g V ar i a b All-In Cost le s

b y Bond COI % T erm , 2011 & 2012 D%Cuo Yield Coupon % UD 5% (4) PA 4 –6Years 7% (5) FL NUMBER 4% (3) >30 Years 34% (26) Other NUMBER 24% (18) OF 8% (6) UT ISSUES 20 11 OF &20 20 8% (6) CA ISSUES 11 BY 12 &20 BOND 26 –30Years 12 55% (42) BY 9% (7) 16% CO (12) MMD+ MMD+ AZ (bps) TERM 313 471 STATE 18 –25Years 11% (8) MI 12% 7% (5) (9) TX (Years) Term 21.0 4.4 market timingsincesixoftheeightwereissuedonaratedbasisin2011. during the17-month This appearstobedue period. relativelyhighcost 8.03%foreightofferingsissued averaging costs, had thehighestborrowing issues,Michigan schools charter pledge. Ofthestateswithfourormore one seriesofthesevenofferingsbenefitedfrom State’s moral obligation only offunds,although 2011, cost thelowest hadamong schools Colorado to Aswasthecaseprior $25million. above issued debtwithparamounts that managementorganizations issueswereforlargecharter school charter FiveofTexas’ million. $30 issuesizeofalmost nine by ahighaverage a Av er State MN l 5$,4. 76%46%18%71%72%3128.7 341 7.23% 7.17% 1.81% 4.67% 7.60% $1,140.5 75 All OH NC DC CO GA NY CA DE AZ NJ PA UT LA MI TX FL ID IL g e Co s t Issues and # of 12 22 .3 .8 .6 .0 .3 8 30.6 25.9 285 320 6.13% 7.47% 6.00% 7.38% 1.66% 2.25% 7.38% 7.34% 6.63% 8.22% $2.2 $3.9 1 1 1. 74%39%17%71%72%2431.0 294 7.20% 7.13% 1.75% 3.97% 7.47% $10.0 1 1. 64%45%15%61%61%2832.2 268 6.10% 6.10% 1.53% 4.59% 6.42% $11.9 1 2. 81%32%12%78%8.00% 7.88% 1.25% 3.25% 8.10% $27.2 1 4. 80%32%13%78%78%3429.9 394 7.52% 7.81% 7.38% 7.81% 2.00% 1.35% 3.80% 3.28% 7.83% 8.07% $36.2 $43.9 2 2 2. 77%47%21%73%73%3431.4 364 7.33% 7.31% 2.13% 4.77% 7.74% $21.0 2 3. 83%35%14%81%8.25% 8.13% 1.45% 3.58% 8.36% $33.1 1 6. 73%34%16%71%71%3930.0 29.9 349 332 7.19% 7.23% 7.13% 7.63% 7.15% 7.63% 1.63% 1.90% 3.45% 1.56% 5.74% 7.34% 3.90% 7.74% $60.0 7.87% $154.5 $57.9 4 5 6 4. 76%39%17%73%74%3329.7 333 7.45% 7.33% 1.73% 3.95% 7.64% $43.6 3 3. 85%55%17%77%7.92% 7.75% 1.73% 5.50% 8.51% $33.2 3 8. 78%58%20%72%72%3431.8 18.4 354 300 7.29% 6.31% 7.23% 6.30% 2.08% 1.46% 5.81% 3.20% 7.83% 6.75% $83.8 $53.6 6 7 290 .6 .0 .9 .5 6.75% 6.65% 1.59% 4.00% 7.06% $269.0 9 7. 80%48%21%75%7.60% 7.56% 2.19% 4.85% 8.03% $74.0 8 P r ici Millions 113 .7 .4 .8 .7 7.38% 7.37% 2.08% 5.94% 7.77% $121.3 n Par g V ar i a b All-In Cost le s

b y State, 2011 & 2012 COI Pima County Industrial Development Authority. IndustrialDevelopment Pima County issuedthroughthe borrower andoneOhio Authority; Development New York Industrial issuedthroughthePhoenix school charter one new multi-stateconduitissuer,thePublic FinanceAuthority; Carolinaissuedthrougha andNorth Georgia inColorado, schools table.Fourcharter intheaccompanying issuer jurisdiction ratherthan location Several issuanceswereclassifiedbyschool UD opnYield Coupon MMD+ MMD+ (bps) 361 355 356 457 307 367 367 287 (Years) Term 30.0 30.5 30.6 29.7 29.9 29.8 29.7 26.5 61 Issuance And Pricing Update 62 Issuance And Pricing Update underwriter’s discountof1.88%. underwriter’s highestaverage which hadthefourth category, constituting the“Other” bythe11Six ofthe20unratedofferingswereunderwritten firms lower-rated offerings. more unratedor higher forfirmswhich underwrote discountswere underwriting three ofwhich wereunrated. Asexpected, fourofferingstotaling$31million, Financial,which underwrote for Lawson offeringsin2011 “BBB-” totaling$18 two to2.63% underwrote million, Bank,which 1.25%forZions firmrangingbetween by underwriting withaverages 1.81%overtheperiod, The discountaveraged underwriter’s $564 million. issuestotaling or39 issuesduringtheperiod, bond school of allcharter 50% approximately ofallissuance.Fourthetenfirmsunderwrote 80% offerings overthe17-month approximately tenfirmsunderwrote period, bond school for charter asleadunderwriter While 21differentfirms served U Piper Jaffray D.A. Davidson CapitalMarkets RBC Underwriter All Other Zions Janney Fifth Third Lawson PNC Ziegler Baird a Av nder Future o er ■■ ■■ ■■ ■■ stand-alone schools likelytodecrease. schools stand-alone percentageof models; capitalize ontheirsuccessfuleducation will continuetoexpandand networks charter Large, non-profit publicschools. alternatives totraditional asviable schools ofcharter Continued publicacceptance statutes. school charter More stateswillenact financing. facility creating greaterdemandfor schools, Continued growthofcharter w g e Co r i t f er s t t he Se Issues

A # of 5$,4. 76%46%18%71%72%3128.7 341 7.23% 7.17% 1.81% 4.67% 7.60% $1,140.5 75 13 11 11 nd 9. 82%46%21%77%7.81% 7.71% 2.18% 4.62% 8.25% $96.8 9 1. 77%30%12%76%76%3528.8 30.0 335 7.63% 344 7.20% 30.8 7.63% 7.29% 7.17% 7.13% 7.29% 7.12% 1.25% 298 7.16% 1.50% 7.28% 3.09% 2.16% 7.05% 6.90% 2.63% 3.33% 7.17% 7.75% 5.20% 1.41% 9.41% 6.85% 7.24% 1.75% $18.1 7.76% 3.16% 1.71% Na $21.3 3.64% $13.8 7.23% 2 4.75% $30.9 7.62% 2 $92.5 7.28% 3 $217.3 4 $194.8 5 7 8

c P t r or ici Millions n Par 125 .4 .2 .8 .2 .7 4 30.0 348 7.37% 7.32% 1.88% 6.02% 7.94% $182.5 136 .7 .6 .1 .4 .0 4 31.4 346 7.20% 7.14% 1.71% 4.36% 7.47% $173.6 9. 71%34%16%68%68%3222.2 332 6.84% 6.83% 1.60% 3.45% 7.19% $98.8 g V ar i a b All-In Cost le s

b y

U nder COI w r i t Fifth Third ■■ ■■ ■■ Janney er, 2011 & 2012 fiscal environment. inadifficult facilities aggregate publicoutlaysforschool waytoreduce effective asacost sponsored enhancementprograms instate- schools ofcharter willapproveeligibility More jurisdictions defaults. additional of thereisalikelihood although Overall defaultratewilldecrease “muninames.” known well eventually becoming and frequentmunicipalmarketborrowers, regular willbecome Some ofthelargeandsuccessfulnetworks 3% (2) UD 4% (3) Lawson Zions 3% 5% (2) (4) opnYield Coupon NUMBER PNC 7% (5) Other 18% (13) OF Ziegler ISSUES 9% (7) 20 11 &20 RBC CapitalMarkets BY Baird 11% (8) MMD+ MMD+ 12 UNDER (bps) 366 309 365 363 327 14% (11) Piper Jaffray D.A. Davidson WR 12% (9) 14% (11) ITER (Years) Term 30.0 30.1 29.6 22.5 29.7 sector defaults. sector performancehasbeenthemaindriverof surprisingthatweakacademic not itis disclosure, includeacademic the defaultedofferingstatementsdidnot 18%. inanother halfof acontributingfactor Giventhat almost and possibly causeof73% ofdefaults Academicperformance wastheprimary factor. someunlikelyrisk not sufferedfromsubpar academics, the sector’s history thus farin defaulted on theirbonds which have of the 22schools A majority day tothenext. transformfrombeingastrongcredittoweakone donot schools Thischarter notice. thecase.Likeanyotherborrower, or no simplyisnot withlittle theirstudentsandcharters canlose schools imply thatcharter fueled attimesbyhigh-profiledefaultsorpotentialdefaults,which seemto 341 basispointsoverthepast17 Thisofcreditriskis months. notion highof wideningtoasector spreadstothetriple-AMMD school charter ofthemunicipalmarket,withaverage inothersectors similarly ratedbonds topaysignificantlyhigherratesthan borrowers school caused charter continuetobeviewedasriskyinvestments.This has schools perception charter sector, to thefundamentaldriversofcreditstrengthincharter as marketparticipants ofconsensusamong thereislack However, because conditions. databehindthemsuggesthealthyfiscal school and theindividualcharter metrics,themedians a percentageofdebtoutstandingwas9.0x.Across incomewas8.6xandmedianunrestrictedcashas debt tonetavailable Mediandayscashonhandwas58, mediannet ratios. satisfactory have werefoundto highpercentageofschools metrics, anoverwhelmingly Measuredbyotherkeyfinancial per pupilfundinginmanyjurisdictions. median increaseinnetassetsFY11 andfreezesin despitecutbacks burden of12.7%. hadasurprisingly strong,10.9%, schools Moreover, mediandebt thanexpected of1.41xandalower coverageratio service mediandebt withahigherthanexpected general marketexpectations, to superior coverageanddebtburdenratios is evidencedbydebtservice issound. sector This conclusion school ofthe charter financial condition foundthattheoverall representing 79% ofoutstandingissuance,wehave Based onanalysisofFY11 schools auditedfinancialstatementsfor298 and unratedportfolios. FY11financial statementsfor andtherepaymentperformanceofrated inaudited asreflected bond-financedschools charter financial strengthof atissuance,thecurrent creditcharacteristics practices, review ofdisclosure includinga sector, bond school comprehensive analysesofthecharter Throughout Volume provided 2ofACompleteHistory,wehave C ON C LU SI ON and ultimately help the sector achieve scale. achieve and ultimatelyhelpthesector financingneeds marketfortheirfacility thetax-exempt toaccess schools charter high-quality enablemore will,however, emphasis onacademics beabletoinanewparadigm.Such an themarketthatmaynot to access schools charter performance hasenabledcertain of,academic disclosure ameaningfulmeasurefor,and agewithout on enrollmentsizeandschool themunicipalmarket.Afocus thatareabletoaccess schools of charter willlikely change theuniverse quality Increased emphasisonacademic sector. school repaymentperformanceofthecharter long-term butalsoanimprovement intheoverall, schools, forcharter costs borrowing onlyinlower resultnot implemented onawidespreadbasis,would for changes that,if asafoundation aremeanttoserve in thisreport contained recommendations extensive data,analysesandbestpractice toevaluatethem.The criteriaemployed items, aswelltheunderwriting withotherkeydisclosure together offeringdocument, school charter beprovidedinevery performancedatathatshould elements ofacademic consensusonstandardized needtoreach ones. Marketparticipants strongcreditsandweak fundamentalscandistinguishbetween school arewell-versedincharter who andothermarketparticipants Underwriters is strainedorcontentious. anditsauthorizer theschool between eveniftherelationship school charter ahigh-quality toclose renewal.Itisdifficultforanauthorizer of charter them.Itisalsothebestpredictor the per-pupilfundingthataccompanies andretainstudents toattract speaks toaschool’s ability long-term Academicquality underwriting. school incharter fundamental creditfactor performanceasa increasedemphasisonacademic It istimetoplace 63 Conclusion 64 Appendix A PENDIX A p APPENDIX A: LONG-TERM BOND RATING SCALES A

Rating Description Fitch Ratings Moody’s Investor Services Standard & Poor’s Investment Grade Highest Quality Aaa Minimal Risk AAA AAA AA + Aa1 AA + High Quality Aa2 Very Low Risk AA AA AA - Aa3 AA - A + A1 A + Upper Medium Grade Quality A2 Low Risk A A A - A3 A - BBB + Baa1 BBB + Lower Medium Grade Quality Baa2 Some Speculative Characteristics BBB BBB BBB - Baa3 BBB - Non-Investment Grade BB + Ba1 BB + Speculative Ba2 Substantial Risk BB BB BB - Ba3 BB - B + B1 B + Highly Speculative B2 High Risk B B B - B3 B - CCC + Caa1 CCC + CCC Caa2 CCC Substantial Risks Caa3 In Poor Standing CCC - CCC - CC Ca CC C C C DDD In Default DD – D D A pPENDIX B Universe 3 3 3 3 3 3 3 33 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 Crew Crew Ziegler Holmstedt Holmstedt Dougherty Dougherty Dougherty Dougherty Dougherty Wells Fargo Wells A.G. Edwards A.G. Edwards Miller Johnson Steichen Kinnard Steichen Westhoff, Cone & Westhoff, Westhoff, Cone & Westhoff, BBB BBB- BBB- Current Rating Current ------RBC Dain Rauscher --- Banc of America Securities ------Morgan Wedbush -- - A- nhanced Unenhanced Lead Manager D C P F E - - BBB BBB- BBB ------A A nhanced Unenhanced E NR NR NR NR NR NR NR NR NR NR S&P Fitch Fitch gency A Credit Rating Rating at Issuance nhancement E Out Unenhanced S&P - 7.580 $ Par 28.965 Out Unenhanced Moody’s - Baa3 - B1 Dain Rauscher 29.590 Mat/Ref ACA Financial Millions Status Arkansas Development Finance AuthorityArkansas Development Finance Authority 3.795 Out 2.570 ADFA Guaranty Out S&P Unenhanced A - Maricopa County Industrial Development Authority Pima County Industrial Development AuthorityPhoenix Industrial Development Authority 10.970Pima County Industrial Development Authority Out 5.842 3.585 ACA FinancialPima County Development Authority Industrial Default Out S&P 12.495 Unenhanced Unenhanced Out A Unenhanced S&P - - Pima County Industrial Development Authority 2.780 Mat/Ref Unenhanced Pima County Industrial Development AuthorityPima County Industrial Development Authority 9.555Pima County Industrial Development Authority 5.161 OutPima County Industrial Development Authority 4.625 Out UnenhancedPima County Industrial Development Authority 11.235 Moody’s Out Unenhanced Pima County Industrial Development Authority 4.680 OutPima County Industrial Development Authority Unenhanced 12.945 -Pima County Industrial Development Authority Out ACA Financial Moody’s 5.825 Out Unenhanced 4.690 S&P Baa3 Out - Unenhanced Out Unenhanced A S&P - Baa3 Unenhanced - - Baa3 - RBC Dain Rauscher Baa3 RBC Dain Rauscher Maricopa County Industrial Development Authority Pima County Industrial Development Authority 12.000 Default Unenhanced Pima County Industrial Development Authority 6.290 Out Unenhanced Pima County Industrial Development Authority 15.395 Out UnenhancedPima County Industrial Development Authority Moody’s 18.725 - Out Unenhanced Baa3 Moody’s - - Baa3 Baa3 Dain Rauscher - Baa3 RBC Dain Rauscher Issuer Benton County Public Facilities Board Benton County Facilities Public Pulaski Charter d/b/a Academics Plus Pulaski School Charter School Charter d/b/a Academics Plus Pulaski School Charter School Maricopa County IDA Pool American Foothills, Prep, (Westwind, Omega, Tempe Heritage, Arizona Montessori, Challenge) Phoenix Advantage Charter School Keystone Montessori Charter School Schools Desert Technology Basic School Noah Webster Milestones Charter School Education Center Paradise Desert Heights Charter School Excalibur CharterThe School Pima County IDA (Series E&F) Pool for Arts, Academy) (Ball-Dobson, New School Valley School Happy Valley Pima County IDA (Series G&H) Pool for Arts) New School (Benchmark, GilbertBell Canyon & West Schools Advanced Education Services d/b/a Solon Senior Academy Horizon Community Learning Center Life School College Preparatory Life School Skyline Technical High School Skyline Technical Pima County IDA (Series A&B) Pool Academy, International Studies Scholars (Young ) Academy, Kingman Academy Learning Pima County IDA (Series C&D) Pool Studies, Education (Hearn, Dobson, Paramount Academy with Community Partners-Arizona, Stepping Stones Academy) Benton County of the Arts School AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AK AK AK 2 2 Appendix B 1/1/2004 2/1/2004 5/1/2003 8/1/2003 8/1/2003 5/1/2003 9/11/2002 8/26/2003 6/26/2003 12/2/2010 12/2/2010 12/2/2010 12/2/2010 12/20/2002 Dated Date State School 3 3/1/2000 21 3/4/2004 18 19 16 17 13 14 15 11 12 910 7/3/2002 6 8/1/2001 4 9/28/2000 2 APPENDIX B: CHARTER SCHOOL BOND ISSUANCE BOND SCHOOL CHARTER B: APPENDIX 7 8/17/2001 20 2/1/2004 5 5/1/2001 8 12/1/2001 1 6/10/2010 65 66 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F Pima County IDA Pool (Series I&J) 22 3/9/2004 AZ (Academy of Tucson, Carden Elementary Charter Pima County Industrial Development Authority 6.735 Mat/Ref Unenhanced Moody’s - Baa3 - - RBC Dain Rauscher School) Pima County IDA Pool (Series K&L) 23 4/8/2004 AZ Pima County Industrial Development Authority 5.620 Mat/Ref Unenhanced Moody’s - Baa3 - - RBC Dain Rauscher (Kingman Academy of Learning) 24 5/18/2004 AZ BASIS Schools Pima County Industrial Development Authority 1.885 Mat/Ref Unenhanced NR -- - - RBC Dain Rauscher 25 5/20/2004 AZ Heritage Elementary School Pima County Industrial Development Authority 5.985 Mat/Ref Unenhanced NR -- - - RBC Dain Rauscher 26 7/8/2004 AZ Pointe Educational Services Pima County Industrial Development Authority 9.750 Mat/Ref Unenhanced NR -- - - RBC Dain Rauscher 27 10/7/2004 AZ Arizona Agribusiness and Equine Center Tucson Industrial Development Authority 8.710 Out Unenhanced S&P - BBB- - BB+ A.G. Edwards 3 3 3 3 28 1/21/2005 AZ La Paloma Academy Pima County Industrial Development Authority 13.180 Out Unenhanced NR -- - - RBC Dain Rauscher 3 3 3 3 29 2/17/2005 AZ Khalsa Family Services Pima County Industrial Development Authority 3.170 Out Unenhanced NR -- - - RBC Dain Rauscher 3 3 3 3 30 3/1/2005 AZ Milestones Charter School Pima County Industrial Development Authority 3.700 Out Unenhanced NR -- -- Dougherty 3 3 3 3 Horizon Community Westhoff, Cone & 31 3/9/2005 AZ Pima County Industrial Development Authority 32.845 Out Unenhanced S&P - BBB- - BBB 3 3 3 3 Learning Center Holmstedt Pima County IDA Pool (Series M&N) 32 6/16/2005 AZ Pima County Industrial Development Authority 2.280 Mat/Ref Unenhanced Moody’s - Baa3 - - RBC Dain Rauscher (Academy of Tucson) Premier Charter High School, 33 9/1/2005 AZ Pima County Industrial Development Authority 10.895 Default Unenhanced NR -- -- Dougherty Air Academy Charter High School 34 10/20/2005 AZ Pointe Educational Services Pima County Industrial Development Authority 15.580 Out Unenhanced NR -- - - RBC Dain Rauscher 3 3 3 3 35 4/1/2006 AZ Arts Academy (PLC Schools) Pima County Industrial Development Authority 12.325 Out Unenhanced NR -- -- Dougherty 3 3 3 3 36 4/25/2006 AZ Southgate Academy Pima County Industrial Development Authority 10.895 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 37 5/10/2006 AZ BASIS Schools (Tucson) Pima County Industrial Development Authority 5.155 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 38 5/17/2006 AZ Villa Montessori Phoenix Industrial Development Authority 5.430 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 39 5/23/2006 AZ Paradise Education Center Pima County Industrial Development Authority 5.515 Out Unenhanced S&P - BB+ - BBB- A.G. Edwards 3 3 3 3 40 6/1/2006 AZ Choice Education and Development Corporation Pima County Industrial Development Authority 28.600 Out Unenhanced NR -- -- Dougherty 3 3 3 3 41 8/29/2006 AZ Franklin Phonetic Primary School Pima County Industrial Development Authority 3.900 Out Unenhanced NR -- -- Baird 3 3 3 3 JPMorgan Chase 42 8/31/2006 AZ Harvest Preparatory Academy Pima County Industrial Development Authority 8.700 Mat/Ref S&P AA-/A-1+ - -- Ziegler Bank 43 9/6/2006 AZ Carpe Diem Collegiate High School Pima County Industrial Development Authority 3.640 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 Miller Johnson Steichen 44 11/21/2006 AZ Success School, Superior School Pima County Industrial Development Authority 7.215 Out Unenhanced NR -- -- 3 3 Kinnard 45 11/29/2006 AZ Espiritu Schools Phoenix Industrial Development Authority 7.855 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 46 12/1/2006 AZ ACCLAIM Charter School Pima County Industrial Development Authority 7.680 Out Unenhanced NR -- -- Dougherty 3 3 3 3 47 12/13/2006 AZ Sonoran Science Academy of Tucson Pima County Industrial Development Authority 10.605 Out Unenhanced NR -- -- Wells Fargo 3 3 3 3 APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F Pima County IDA Pool (Series O&P) 48 1/18/2007 AZ Pima County Industrial Development Authority 14.995 Out Unenhanced Moody’s - Baa3 - Baa3 RBC Capital Markets 3 3 (Kingman Academy of Learning) BASIS Schools 49 2/26/2007 AZ Pima County Industrial Development Authority 9.000 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 (Tucson & Scottsdale) 50 3/21/2007 AZ Tucson Country Day School Pima County Industrial Development Authority 6.220 Out Unenhanced S&P - BBB- - BBB- A.G. Edwards 3 3 3 3 51 5/31/2007 AZ Heritage Elementary School Pima County Industrial Development Authority 17.000 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 52 7/12/2007 AZ Center for Academic Success Pima County Industrial Development Authority 9.000 Out Unenhanced S&P - BBB- - BBB- RBC Capital Markets 3 3 3 3 Bennett Academy 53 10/4/2007 AZ Benson Industrial Development Authority 3.550 Out ACA Financial S&P A - -- Cohen (21st Century) 54 10/10/2007 AZ The Edge School Pima County Industrial Development Authority 4.630 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 55 10/25/2007 AZ American Charter Schools Foundation Pima County Industrial Development Authority 82.185 Out Unenhanced Fitch - BBB - BBB RBC Capital Markets 3 3 3 3 Griffin Foundation d/b/a Children Reaching for 56 1/17/2008 AZ Pima County Industrial Development Authority 6.850 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 the Sky 57 2/1/2008 AZ Success School, Superior School Pima County Industrial Development Authority 4.785 Out Unenhanced NR -- - - Piper Jaffray 3 3 58 3/27/2008 AZ Valley Academy Pima County Industrial Development Authority 5.860 Out Unenhanced Moody’s - Baa3 - Baa3 RBC Capital Markets 3 3 3 3 59 10/31/2008 AZ Arizona School for the Arts Phoenix Industrial Development Authority 10.500 Out Unenhanced NR -- - - Wedbush Morgan 3 3 3 3 60 6/5/2009 AZ Arizona Academy of Leadership Pima County Industrial Development Authority 3.600 Out Unenhanced NR -- -- Baird 3 3 3 3 61 8/10/2009 AZ Berean Academy Pima County Industrial Development Authority 7.630 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 62 8/31/2009 AZ Legacy Traditional Charter School Pima County Industrial Development Authority 16.040 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 63 12/23/2009 AZ Career Success Schools City of Phoenix Industrial Development Authority 11.225 Out Unenhanced S&P - BBB- - BB+ Ziegler 3 3 3 3 64 3/5/2010 AZ EAGLE College Prep Phoenix Industrial Development Authority 7.010 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 BASIS Schools 65 3/18/2010 AZ Florence Industrial Development Authority 5.450 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 (Oro Valley) 66 4/6/2010 AZ Flagstaff Arts and Leadership Academy Pima County Industrial Development Authority 4.125 Out Unenhanced NR -- -- Dougherty 3 3 3 3 67 4/13/2010 AZ Cambridge Academy-East Pima County Industrial Development Authority 8.445 Out Unenhanced Fitch - BBB- - BBB- D.A. Davidson 3 3 3 3 Caurus Academy 68 4/20/2010 AZ Pima County Industrial Development Authority 4.380 Out Unenhanced NR -- - - Lawson Financial 3 3 3 3 (Arizona Montessori School of Anthem) 69 5/12/2010 AZ Odyssey Preparatory Academy Pima County Industrial Development Authority 7.700 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 70 5/13/2010 AZ Academy of Tucson Pima County Industrial Development Authority 9.385 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 71 5/26/2010 AZ Montessori Academy Pima County Industrial Development Authority 5.725 Out Unenhanced NR -- - - Lawson Financial 3 3 3 3 72 6/30/2010 AZ Destiny Community School Pima County Industrial Development Authority 4.000 Out Unenhanced NR -- - - Lawson Financial 3 3 3 3 73 10/20/2010 AZ Paradise Education Center Pima County Industrial Development Authority 12.800 Out Unenhanced S&P - BBB- - BBB- RBC Capital Markets 3 3 3 3 Riverbend Prep 74 11/1/2010 AZ Pima County Industrial Development Authority 4.200 Out Unenhanced NR -- -- Dougherty 3 3 3 3 (West Valley Arts and Technology Academy) 67 Appendix B 68 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F 75 11/10/2010 AZ Sequoia Pathway Academy Pima County Industrial Development Authority 13.450 Out Unenhanced NR -- - - Lawson Financial 3 3 3 3 BASIS Schools 76 11/17/2010 AZ Florence Industrial Development Authority 6.645 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 (Chandler) BASIS Schools 77 11/17/2010 AZ Florence Industrial Development Authority 6.665 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 (Peoria) 78 12/7/2010 AZ Scottsdale Preparatory Academy Florence Industrial Development Authority 11.630 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 BASIS Schools 79 12/16/2010 AZ Florence Industrial Development Authority 6.995 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 (Flagstaff) 80 2/17/2011 AZ Arizona Agribusiness and Equine Center Yavapai County Industrial Development Authority 14.605 Out Unenhanced S&P - BB+ - BB+ Baird 3 3 3 3 81 4/6/2011 AZ Park View School Pima County Industrial Development Authority 6.625 Out Unenhanced NR -- - - Lawson Financial 3 3 3 3 82 5/6/2011 AZ Arizona School for the Arts Phoenix Industrial Development Authority 8.750 Out Unenhanced NR -- - - Stifel Nicolaus 3 3 3 3 83 9/8/2011 AZ Fountain Hills Charter School Pima County Industrial Development Authority 2.800 Out Unenhanced NR -- - - Lawson Financial 3 3 3 BASIS Schools 84 11/8/2011 AZ Florence Industrial Development Authority 7.955 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 (Phoenix) 85 11/8/2011 AZ Harvest Preparatory Academy Pima County Industrial Development Authority 10.500 Out Unenhanced S&P - BBB- - BBB- Lawson Financial 3 3 3 1/5/2012 2 AZ American Leadership Academy Pima County Industrial Development Authority 10.975 Out Unenhanced NR -- - - Lawson Financial 3 3 3 86 1/5/2012 2 AZ American Leadership Academy Pima County Industrial Development Authority 0.454 Out Unenhanced NR -- -- Na 87 1/25/2012 AZ Great Hearts Academies - Veritas Prep Phoenix Industrial Development Authority 16.425 Out Unenhanced Fitch - BBB - BBB RBC Capital Markets 3 3 3 88 2/7/2012 AZ Carden Traditional Schools Pima County Industrial Development Authority 16.500 Out Unenhanced Fitch - BBB- - BBB- Ziegler 3 3 3 89 2/24/2012 AZ Painted Rock Academy Phoenix Industrial Development Authority 10.000 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 90 3/2/2012 AZ Basis Tucson North Pima County Industrial Development Authority 10.000 Out Unenhanced NR -- - - RBC Capital Markets 3 3 3 3 91 4/2/2012 AZ P.L.C. Charter Schools Pima County Industrial Development Authority 5.730 Out Unenhanced NR -- -- Dougherty 3 3 3 Aspire Public Schools California Statewide Communities Development 92 5/15/2001 CA 17.560 Mat/Ref Unenhanced NR -- - - Prager, McCarthy & Sealy (Oakland, Lodi) Authority California Statewide Communities Development 93 11/7/2001 CA Escondido Charter High School 8.600 Mat/Ref Unenhanced NR -- - - Prager, McCarthy & Sealy Authority Aspire Public Schools California Statewide Communities Development 94 12/5/2002 CA 11.945 Mat/Ref Unenhanced NR -- - - Prager, McCarthy & Sealy (Lodi) Authority 95 6/21/2006 CA Escondido High School, Heritage Charter School California Municipal Finance Authority 25.500 Out Unenhanced S&P - BBB- - BBB- Ziegler 3 3 California Statewide Communities Development 96 5/23/2007 CA Aspire and Huntington Park Alliance 15.750 Out Unenhanced NR -- - - RBC Capital Markets 3 Authority High Tech High 97 4/29/2008 CA California Municipal Finance Authority 23.515 Out Unenhanced Fitch - BB+ - BB+ RBC Capital Markets 3 3 3 (Chula Vista and Media Arts) 98 8/14/2008 CA Orange County Educational Arts Academy California Municipal Finance Authority 10.515 Out Unenhanced NR -- -- Wachovia 3 3 3 3 99 5/13/2009 CA King Chavez Academies California Municipal Finance Authority 8.895 Out Unenhanced S&P - BBB- - BB+ Baird APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F California Statewide Communities Development Third-party 100 4/1/2010 CA Aspire Public Schools 93.295 Out Fitch - BBB - BBB RBC Capital Markets 3 3 3 3 Authority Guaranty 101 9/22/2010 CA Literacy First Charter School California Municipal Finance Authority 3.725 Out Unenhanced S&P - BBB- - BBB- Ziegler 3 3 3 3 California Statewide Communities Development 102 6/22/2011 CA The Rocklin Academy 10.400 Out Unenhanced S&P - BB+ - BB+ Piper Jaffray 3 3 3 3 Authority Animo Inglewood Charter High School California Statewide Communities Development 103 7/20/2011 CA 8.260 Out Unenhanced Fitch - BBB- - BBB- Baird 3 3 3 (Green Dot) Authority California Statewide Communities Development 104 8/25/2011 CA Alliance for College-Ready Public Schools 22.565 Out Unenhanced Fitch - BBB - BBB RBC Capital Markets 3 3 3 Authority California Statewide Communities Development 105 9/8/2011 CA Rocketship Four - Mosaic Elementary School 10.115 Out Unenhanced NR -- -- De La Rosa 3 3 3 Authority California Statewide Communities Development 106 2/13/2012 CA Alliance for College-Ready Public Schools 8.455 Out Unenhanced S&P - BBB- - BBB- RBC Capital Markets 3 3 3 Authority 107 5/31/2012 CA Santa Rosa Academy California Municipal Finance Authority 24.035 Out Unenhanced S&P - BB - BB Ziegler 3 3 3 Colorado Educational and Cultural Facilities 108 7/8/1999 CO Liberty Common School 3.666 Mat/Ref Unenhanced NR -- - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 109 8/5/1999 CO DCS Montessori School 7.235 Mat/Ref Unenhanced NR -- -- Bigelow Authority Colorado Educational and Cultural Facilities 110 9/29/1999 CO The Renaissance School 3.690 Mat/Ref Unenhanced S&P - BBB- - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities Western Municipal 111 10/1/1999 CO Jefferson Academy 2.600 Mat/Ref Unenhanced S&P - BBB- -- Authority Securities Colorado Educational and Cultural Facilities 112 11/3/1999 CO Core Knowledge Charter School 3.330 Mat/Ref Unenhanced S&P - BBB - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 113 2/15/2000 CO Crown Pointe Academy of Westminster 0.965 Mat/Ref Unenhanced NR -- -- Bigelow Authority Colorado Educational and Cultural Facilities 114 6/8/2000 CO Compass Montessori Charter School 2.015 Mat/Ref Unenhanced NR -- -- Bigelow Authority Colorado Educational and Cultural Facilities 115 6/29/2000 CO Charter School, Elbert County 0.695 Mat/Ref Unenhanced NR -- - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities Fitch BBB- 116 10/1/2000 CO Bromley East Charter School 12.955 Mat/Ref Unenhanced - - - Kirkpatrick Pettis Authority Moody’s Baa3 Colorado Educational and Cultural Facilities 117 11/1/2000 CO Academy Charter School 7.560 Mat/Ref Unenhanced S&P - BBB - - Hanifen & Imhoff Authority Colorado Educational and Cultural Facilities Western Municipal 118 11/1/2000 CO Jefferson Academy 0.565 Mat/Ref Unenhanced NR -- -- Authority Securities Colorado Educational and Cultural Facilities 119 11/28/2000 CO The Classical Academy 19.600 Mat/Ref Unenhanced Moody’s - Baa3 - - Kirkpatrick Pettis Authority 69 Appendix B 70 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F Colorado Educational and Cultural Facilities 120 12/12/2000 CO Elbert County Charter School - Legacy Academy 1.005 Mat/Ref Unenhanced NR -- - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 121 3/13/2001 CO Lincoln Academy Charter School 2.430 Mat/Ref Unenhanced NR -- - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 122 6/7/2001 CO Cherry Creek Academy 4.155 Mat/Ref Unenhanced Moody’s - Baa2 - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 123 8/15/2001 CO Peak to Peak Charter School 18.800 Mat/Ref Unenhanced Moody’s - Ba2 - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 124 9/15/2001 CO University Lab School 17.630 Mat/Ref Unenhanced Moody’s - Baa3 - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 125 10/1/2001 CO Frontier Academy 15.830 Mat/Ref Unenhanced Moody’s - Ba1 - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities Moody’s Baa3 126 12/1/2001 CO Pinnacle Charter School 12.355 Mat/Ref Unenhanced - - - Stifel Nicolaus Authority S&P BBB Colorado Educational and Cultural Facilities 127 1/15/2002 CO Collegiate Academy of Colorado 6.780 Mat/Ref Unenhanced Moody’s - Ba1 - - Stifel Nicolaus Authority Colorado Educational and Cultural Facilities 128 1/15/2002 CO Littleton Academy Charter School 4.450 Mat/Ref Unenhanced S&P - BBB - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 129 3/1/2002 CO Compass Montessori Secondary School 5.645 Mat/Ref Unenhanced NR -- - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities Fitch BB+ 130 3/1/2002 CO Platte River Academy 6.875 Mat/Ref Unenhanced - - - Kirkpatrick Pettis Authority Moody’s Ba1 Colorado Educational and Cultural Facilities 131 3/15/2002 CO DCS Montessori Charter School 9.795 Out Unenhanced S&P - BBB - BBB Kirkpatrick Pettis 3 3 3 3 Authority Colorado Educational and Cultural Facilities 132 5/1/2002 CO Montessori Peaks Academy 5.860 Mat/Ref Unenhanced NR -- - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 133 10/1/2002 CO Belle Creek Charter School 8.630 Mat/Ref Unenhanced NR -- - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 134 11/1/2002 CO Stargate Charter School 6.795 Mat/Ref Unenhanced S&P - BBB- - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 5/22/2003 1 CO Cheyenne Mountain Charter Academy 2.215 Mat/Ref Unenhanced S&P - BBB- - - A.G. Edwards Authority 135 Colorado Educational and Cultural Facilities 5/22/2003 1 CO Jefferson Academy 3.310 Mat/Ref Unenhanced S&P - BBB- - - A.G. Edwards Authority Fitch AAA - A - Colorado Educational and Cultural Facilities Syncora (XL)/ 136 10/1/2003 CO Pinnacle Charter School 22.305 Out Moody’s Aaa - - - Kirkpatrick Pettis 3 3 3 Authority Moral Obligation S&P AAA BBB A BBB Colorado Educational and Cultural Facilities Syncora (XL)/ Moody’s Aaa - - - 137 10/1/2003 CO The Classical Academy 39.595 Out Kirkpatrick Pettis 3 3 3 Authority Moral Obligation S&P AAA BBB A BBB APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F Pioneer Charter School Colorado Educational and Cultural Facilities 138 10/22/2003 CO 4.990 Out Unenhanced NR -- - - Kirkpatrick Pettis 3 3 (now Eagle Ridge) Authority Colorado Educational and Cultural Facilities 139 11/1/2003 CO Leadership Preparatory Academy 2.120 Mat/Ref Unenhanced NR -- - - Kirkpatrick Pettis Authority Colorado Educational and Cultural Facilities 140 12/1/2003 CO Excel Academy Charter School 6.830 Mat/Ref Unenhanced NR -- - - Kirkpatrick Pettis Authority Denver Arts & Technology Academy Colorado Educational and Cultural Facilities 141 12/3/2003 CO 8.415 Default Unenhanced NR -- - - Kirkpatrick Pettis (now Cesar Chavez Academy Denver) Authority Colorado Educational and Cultural Facilities Syncora (XL)/ Moody’s Aaa - - - 142 12/15/2003 CO Liberty Common School 7.190 Out Kirkpatrick Pettis 3 3 3 Authority Moral Obligation S&P AAA BBB- A BBB- Colorado Educational and Cultural Facilities Zions First 143 1/30/2004 CO Challenge to Excellence Charter School 6.950 Mat/Ref Moody’s A2/VMIG 1 - - - Stifel Nicolaus Authority National Colorado Educational and Cultural Facilities Syncora (XL)/ Moody’s Aaa - - 144 4/1/2004 CO Core Knowledge Charter School - Parker 4.805 Out - Kirkpatrick Pettis 3 3 3 Authority Moral Obligation S&P AAA BBB A Fitch AAA - - - Colorado Educational and Cultural Facilities Syncora (XL)/ 145 4/15/2004 CO Peak to Peak Charter School 23.300 Out Moody’s Aaa - - - Kirkpatrick Pettis 3 3 3 Authority Moral Obligation S&P AAA BBB A BBB+ Fitch AAA - - BBB- Colorado Educational and Cultural Facilities Syncora (XL)/ 146 5/1/2004 CO The Academy of Charter Schools 20.765 Out Moody’s Aaa - - - Kirkpatrick Pettis 3 3 3 Authority Moral Obligation S&P AAA BBB- A - Fitch AAA - - - Colorado Educational and Cultural Facilities Syncora (XL)/ 147 5/15/2004 CO Collegiate Academy of Colorado 8.195 Out Moody’s Aaa - - - Stifel Nicolaus 3 3 3 Authority Moral Obligation S&P AAA BBB- A BBB- Fitch AAA - - - Colorado Educational and Cultural Facilities Syncora (XL)/ 148 8/1/2004 CO University Lab School 20.525 Out Moody’s Aaa Baa3 - Baa3 Kirkpatrick Pettis 3 3 3 Authority Moral Obligation S&P AAA BBB- A - James Irwin Charter High School, Colorado Educational and Cultural Facilities Zions First 149 9/2/2004 CO 9.700 Mat/Ref Moody’s A2/VMIG 1 - - - A.G. Edwards James Irwin Charter Middle School Authority National Fitch AAA - - - Colorado Educational and Cultural Facilities Syncora (XL)/ 150 9/15/2004 CO Aurora Academy 7.275 Out Moody’s Aaa - - - Kirkpatrick Pettis 3 3 3 Authority Moral Obligation S&P AAA BBB- A BBB- Colorado Educational and Cultural Facilities 151 10/1/2004 CO Denver School of Science and Technology 1.500 Out Unenhanced NR -- - - Kirkpatrick Pettis 3 3 3 Authority Colorado Educational and Cultural Facilities 152 11/1/2004 CO Elbert County Charter School - Legacy Academy 6.015 Out Unenhanced NR -- - - Kirkpatrick Pettis 3 3 3 Authority Fitch AAA - - - Colorado Educational and Cultural Facilities Syncora (XL)/ 153 11/10/2004 CO Platte River Academy 8.025 Out Moody’s Aaa - - - A.G. Edwards 3 3 3 3 Authority Moral Obligation S&P AAA BBB- A BBB Fitch AAA - - - Colorado Educational and Cultural Facilities Syncora (XL)/ Kirkpatrick Pettis, 154 5/15/2005 CO Woodrow Wilson Academy 6.275 Out Moody’s Aaa - - - 3 3 3 Authority Moral Obligation D.A. Davidson S&P AAA BBB- A BBB 71 Appendix B 72 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F Fitch AAA BBB- - Colorado Educational and Cultural Facilities Syncora (XL)/ Kirkpatrick Pettis, 155 6/1/2005 CO Bromley East Charter School 14.370 Out Moody’s Aaa - - - 3 3 3 Authority Moral Obligation D.A. Davidson S&P AAA BBB- A Fitch AAA - - - Colorado Educational and Cultural Facilities Syncora (XL)/ 156 6/7/2005 CO Lincoln Academy Charter School 2.470 Out Moody’s Aaa - - - Wells Fargo 3 3 3 Authority Moral Obligation S&P AAA BBB- A BBB- Colorado Educational and Cultural Facilities Kirkpatrick Pettis, 157 8/15/2005 CO Knowledge Quest Academy 5.840 Out Unenhanced NR -- -- 3 3 3 Authority D.A. Davidson Fitch AAA - - Colorado Educational and Cultural Facilities Syncora (XL)/ Kirkpatrick Pettis, 158 8/30/2005 CO Excel Academy Charter School 7.610 Out Moody’s Aaa - - - 3 3 3 3 Authority Moral Obligation D.A. Davidson S&P AAA BBB- A Fitch AAA - - Colorado Educational and Cultural Facilities Syncora (XL)/ Kirkpatrick Pettis, 159 8/30/2005 CO Ridgeview Classical Schools 8.185 Out Moody’s Aaa - - - 3 3 3 Authority Moral Obligation D.A. Davidson S&P AAA BBB- A Northern Colorado Academy of Arts and Knowledge Colorado Educational and Cultural Facilities 160 5/23/2006 CO 5.965 Out Unenhanced NR -- - - D.A. Davidson 3 (T.R. Paul Academy) Authority Colorado Educational and Cultural Facilities 161 6/23/2006 CO Banning Lewis Ranch Academy 8.000 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 Authority Colorado Educational and Cultural Facilities 162 9/12/2006 CO Academy Charter School 7.985 Out Moral Obligation S&P A BBB A BBB A.G. Edwards 3 3 3 3 Authority Colorado Educational and Cultural Facilities CIFG NA/ 163 9/27/2006 CO Cheyenne Mountain Charter Academy 11.670 Out S&P AAA BBB- AA- BBB- A.G. Edwards 3 3 3 3 Authority Moral Obligation Colorado Educational and Cultural Facilities CIFG NA/ Moody’s Aaa - Aa3 - 164 10/4/2006 CO Frontier Academy 17.750 Out Wells Fargo 3 3 3 Authority Moral Obligation S&P AAA BBB- AA- BBB- Colorado Educational and Cultural Facilities CIFG NA/ Moody’s Aaa - - - 165 11/28/2006 CO Stargate Charter School 9.805 Out D.A. Davidson 3 3 3 Authority Moral Obligation S&P AAA BBB- AA- BBB- Colorado Educational and Cultural Facilities 166 12/7/2006 CO Montessori Peaks Academy 7.575 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 Authority Colorado Educational and Cultural Facilities 167 12/11/2006 CO Brighton Charter School 10.195 Default Unenhanced NR -- - - D.A. Davidson Authority Colorado Educational and Cultural Facilities CIFG NA/ 168 12/19/2006 CO Littleton Academy Charter School 5.235 Out S&P AAA BBB AA- BBB Stifel Nicolaus 3 3 3 Authority Moral Obligation Colorado Educational and Cultural Facilities 169 12/20/2006 CO Carbon Valley Academy 5.305 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 Authority Colorado Educational and Cultural Facilities 170 12/20/2006 CO Compass Montessori Secondary School - Golden 6.380 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 Authority Colorado Educational and Cultural Facilities 171 3/28/2007 CO Union Colony Charter School 4.815 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 Authority Challenges, Choices and Images Literacy and Colorado Educational and Cultural Facilities 172 4/18/2007 CO 18.430 Default Unenhanced NR -- - - D.A. Davidson Technology Center Authority APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F Colorado Educational and Cultural Facilities CIFG NA/ 173 4/24/2007 CO Cesar Chavez Academy 15.570 Out S&P AAA BBB- AA- - D.A. Davidson 3 3 3 Authority Moral Obligation Colorado Educational and Cultural Facilities CIFG NA/ 174 6/14/2007 CO Belle Creek Charter School 9.300 Out S&P AAA - AA- - A.G. Edwards 3 3 3 3 Authority Moral Obligation Colorado Educational and Cultural Facilities CIFG NA/ 175 7/2/2007 CO James Irwin Educational Foundation 20.900 Out S&P AAA - AA- - A.G. Edwards 3 3 3 3 Authority Moral Obligation Colorado Educational and Cultural Facilities 176 7/5/2007 CO Windsor Charter Academy 6.905 Out Unenhanced S&P - BB+ - BBB- D.A. Davidson 3 3 3 Authority Colorado Educational and Cultural Facilities 177 7/31/2007 CO James Madison Charter Academy 2.040 Out Unenhanced NR -- - - D.A. Davidson 3 Authority Colorado Educational and Cultural Facilities 178 7/31/2007 CO Northeast Academy Charter School 5.210 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 Authority Colorado Educational and Cultural Facilities CIFG NA/ Moody’s Aaa - 179 8/23/2007 CO Challenge to Excellence Charter School 7.545 Out - - Stifel Nicolaus 3 3 3 Authority Moral Obligation S&P AAA AA- Colorado Educational and Cultural Facilities 180 9/28/2007 CO Monument Academy Charter School 12.270 Out Unenhanced S&P - BB - BBB- D.A. Davidson 3 3 3 3 Authority Colorado Educational and Cultural Facilities 181 12/27/2007 CO Cheyenne Mountain Charter Academy 10.605 Out Moral Obligation S&P A BBB- A BBB- Wachovia 3 3 3 3 Authority Colorado Educational and Cultural Facilities 182 1/25/2008 CO Pikes Peak School of Expeditionary Learning 6.500 Out Unenhanced NR -- - - Gates Capital 3 Authority Colorado Educational and Cultural Facilities 183 2/20/2008 CO Community Leadership Academy 8.810 Out Unenhanced NR -- -- Wachovia 3 3 3 3 Authority Colorado Educational and Cultural Facilities 184 4/8/2008 CO New Vision Charter School 4.810 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 Authority Colorado Educational and Cultural Facilities 185 8/18/2008 CO Flagstaff Academy 13.505 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 Authority Colorado Educational and Cultural Facilities 186 8/26/2008 CO The Academy of Charter Schools 6.145 Out Moral Obligation S&P A BBB- A - D.A. Davidson 3 3 3 Authority Colorado Educational and Cultural Facilities 187 9/24/2008 CO Monument Academy 1.610 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 Authority Colorado Educational and Cultural Facilities 188 10/30/2008 CO The Classical Academy 14.025 Out Moral Obligation S&P A BBB A BBB D.A. Davidson 3 3 3 3 Authority Colorado Educational and Cultural Facilities 189 11/13/2008 CO North Star Academy 10.975 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 Authority Colorado Educational and Cultural Facilities 190 11/18/2008 CO Twin Peaks Charter Academy 14.235 Out Moral Obligation S&P A BBB- A BBB- D.A. Davidson 3 3 3 Authority Colorado Educational and Cultural Facilities Fitch - BBB+ A 191 12/2/2008 CO American Academy 17.030 Out Moral Obligation - D.A. Davidson 3 3 3 Authority S&P A - A 73 Appendix B 74 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F Colorado Educational and Cultural Facilities 192 10/1/2009 CO Crowne Point Academy of Westminster 7.755 Out Moral Obligation Fitch A BBB+ A - D.A. Davidson 3 3 3 Authority Colorado Educational and Cultural Facilities 193 1/13/2010 CO Pinnacle Charter School 12.985 Out Moral Obligation Fitch A - A - D.A. Davidson 3 3 3 3 Authority Colorado Educational and Cultural Facilities 194 2/25/2010 CO Colorado Springs Charter Academy 7.355 Out Moral Obligation S&P A BBB- A BBB- Gates Capital 3 3 3 3 Authority Colorado Educational and Cultural Facilities 195 2/25/2010 CO High Point Academy 11.930 Out Moral Obligation S&P A - A - D.A. Davidson 3 3 3 3 Authority Colorado Educational and Cultural Facilities 196 7/7/2010 CO Free Horizon Montessori School 6.550 Out Moral Obligation S&P A - A - D.A. Davidson 3 3 3 3 Authority Colorado Educational and Cultural Facilities 197 10/22/2010 CO Core Knowledge Charter School - Parker 2.435 Out Moral Obligation S&P A BBB- A BBB- D.A. Davidson 3 3 3 Authority Colorado Educational and Cultural Facilities 198 11/19/2010 CO Caprock Academy 9.865 Out Unenhanced NR -- -- Baird 3 3 3 3 Authority Colorado Educational and Cultural Facilities Fitch - BBB- - BBB- 199 11/23/2010 CO The Academy of Charter Schools 10.060 Out Moral Obligation D.A. Davidson 3 3 3 Authority S&P A - A - Colorado Educational and Cultural Facilities 200 12/16/2010 CO Rocky Mountain Academy of Evergreen 5.085 Out Moral Obligation S&P A BBB- A BBB- Stern, Agee & Leach 3 3 3 3 Authority 201 1/11/2011 3 CO Highline Academy Charter School Public Finance Authority 8.375 Out Unenhanced S&P - BBB- - BBB- D.A. Davidson 3 3 3 202 1/24/2011 3 CO Global Village Academy Public Finance Authority 8.365 Out Unenhanced S&P - BB+ - - D.A. Davidson 3 3 Colorado Educational and Cultural Facilities 4/8/2011 2 CO Twin Peaks Charter Academy 2.515 Out Moral Obligation S&P A BBB- A BBB- D.A. Davidson 3 3 3 3 Authority 203 Colorado Educational and Cultural Facilities 4/8/2011 2 CO Twin Peaks Charter Academy 2.260 Out Unenhanced S&P - BBB- - BBB- D.A. Davidson 3 Authority Colorado Educational and Cultural Facilities 204 12/29/2011 CO Liberty Common Middle High School 5.500 Out Unenhanced NR -- - - D.A. Davidson 3 3 Authority Colorado Educational and Cultural Facilities 205 2/29/2012 CO Union Colony Charter School 7.260 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 Authority Colorado Educational and Cultural Facilities 206 3/30/2012 CO Cherry Creek Academy 3.460 Out Unenhanced Moody’s - Baa2 - Baa2 D.A. Davidson 3 3 3 Authority Colorado Educational and Cultural Facilities 207 4/12/2012 CO Jefferson Academy 15.900 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 Authority Integrated Design Electronics Academy Public 208 5/30/2002 DC District of Columbia 2.600 Mat/Ref Allfirst Bank Moody’s A1/VMIG 1 - -- Allfirst Bank Charter School 209 12/16/2002 DC Arts & Technology Academy District of Columbia 3.900 Mat/Ref Allfirst Bank Moody’s A1/VMIG 1 - -- Allfirst Bank 210 11/1/2003 DC Friendship Public Charter School District of Columbia 44.880 Out ACA Financial S&P A BBB - BBB Citigroup 3 3 3 3 Aa1/ A2/ 211 11/18/2004 DC Howard Road Academy Public Charter School District of Columbia 6.295 Out Bank of America Moody’s - - Banc of America Securities VMIG 1 VMIG 1 APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F Aa1/ A2/ 212 6/7/2005 DC St. Coletta Special Education Public Charter School District of Columbia 16.600 Out Bank of America Moody’s - - Banc of America VMIG 1 VMIG 1 Manufacturers Manufacturers and 213 6/15/2005 DC D.C. Preparatory Academy District of Columbia 5.500 Out S&P A/A-1 - A/A-1 - 3 and Traders Trust Traders Trust 214 12/28/2006 DC Friendship Public Charter School District of Columbia 15.000 Out ACA Financial S&P A BBB - BBB Citigroup 3 3 3 3 215 5/24/2007 DC Community Academy Public Charter School District of Columbia 25.000 Out ACA Financial S&P A BB+ - BBB- Cornerstone Capital 3 Manufacturers Manufacturers and 216 6/26/2007 DC D.C. Preparatory Academy DIstrict of Columbia 9.580 Out S&P A/A-1 - A/A-1 - 3 and Traders Trust Traders Trust Manufacturers Manufacturers and 217 5/15/2008 DC KIPP DC DIstrict of Columbia 28.225 Out S&P A/A-1 - A/A-1 - 3 and Traders Trust Traders Trust 218 6/1/2010 DC Arts & Technology Academy Na 7.200 Out Unenhanced NR -- -- Allfirst 219 3/2/2011 DC Cesar Chavez Public Charter Schools District of Columbia 27.210 Out Unenhanced S&P - BBB- - BBB- PNC 3 3 3 3 Aa3/ 220 11/8/2002 DE Charter School, Inc. Kent County 4.385 Mat/Ref Unenhanced Moody’s - -- Na VMIG1 221 10/31/2006 DE Newark Charter School New Castle County 14.905 Out Unenhanced S&P - BBB- - BBB A.G. Edwards 3 3 3 3 222 8/27/2008 3 DE Delaware Military Academy Pima County Industrial Development Authority 12.200 Out PNC Bank S&P AA/A-1+ - A/A-1 - PNC 3 Aa3/ A2/ 223 12/18/2008 DE Providence Creek Academy Charter School Kent County 13.150 Out PNC Bank Moody’s - - PNC VMIG 1 VMIG 1 224 8/31/2010 DE Delaware College Preparatory Academy City of Wilmington 3.610 Out Unenhanced NR -- - - Gates Capital 3 3 3 3 Charter School, Inc. 225 5/26/2011 DE Kent County, Delaware 3.930 Out Unenhanced S&P - BBB- - BBB- RBC Capital Markets 3 3 3 3 d/b/a Campus Community School National Fitch AAA 226 2/1/2000 FL Four Corners Charter School Osceola County School Board 17.080 Mat/Ref - - - Paine Webber (MBIA) Moody’s Aaa National 227 8/15/2000 FL Florida State University Schools City of Tallahassee 23.330 Mat/Ref Moody’s Aaa - - - Salomon Smith Barney (MBIA) Museum of Science and Industry Foundation, 228 5/3/2001 FL Hillsborough County 1.770 Mat/Ref Bank of America Fitch AA/F1+ - - - Banc of America Securities Back to Basics Charter School AAA - National Fitch Moody’s 229 11/1/2001 FL P.M. Wells Charter Academy Osceola County Industrial Development Authority 9.425 Out Aaa - - Baa2 Prager, McCarthy & Sealy 3 3 3 (MBIA) S&P AAA BBB National Fitch AAA 230 11/15/2001 FL Pembroke Pines Charter Schools City of Pembroke Pines 31.910 Mat/Ref - - - William R. Hough (MBIA) Moody’s Aaa Fitch AAA - National 231 2/1/2002 FL Canoe Creek Charter School Osceola County Industrial Development Authority 9.860 Out Moody’s Aaa - - Baa2 Prager, McCarthy & Sealy 3 3 (MBIA) S&P AAA BBB National Fitch 232 3/15/2002 FL Pembroke Pines Charter Schools City of Pembroke Pines 20.060 Mat/Ref AAA Aaa - - - William R. Hough (MBIA) Moody’s 233 12/10/2002 FL Oakland Avenue Charter School Town of Oakland 8.125 Out Unenhanced NR -- - - Commerce Capital 75 Appendix B 76 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F 234 10/29/2003 FL Oakland Charter School Town of Oakland 0.455 Mat/Ref Unenhanced NR -- - - Commerce Capital 235 4/15/2004 FL Bellalago Charter School Bellalago Educational Facilities Benefit District 14.345 Out Unenhanced NR -- - - Prager & Sealy 3 Columbus Bank 236 7/26/2004 FL Bay Haven Charter Academy Bay County 11.600 Mat/Ref S&P A+/A-1 - - - Merchant Capital & Trust 237 10/1/2004 FL Bellalago Charter School Bellalago Educational Facilities Benefit District 13.720 Out Unenhanced NR -- - - Prager & Sealy 3 238 2/17/2005 FL Sarasota Military Academy Sarasota County 2.000 Out Wachovia Bank NR -- -- Wachovia National (MBIA)/ Fitch AAA - 239 4/19/2005 FL Four Corners Charter School Osceola County School Board 12.095 Out School District Moody’s Aaa - A3 - Citigroup 3 Pledge S&P AAA BBB Kirkpatrick Pettis, 240 12/14/2005 FL G Star School of the Arts Palm Beach County 4.955 Out Unenhanced S&P - BB - BB 3 D.A. Davidson 241 4/3/2006 FL Palm Bay Community Charter School - Patriot Palm Bay City 21.100 Default Unenhanced NR -- - - Gates Capital 242 9/28/2006 FL Palm Bay Academy Charter School Florida Development Finance Corporation 5.920 Out Unenhanced S&P - BB- - - D.A. Davidson 3 3 3 3 National (MBIA)/ 243 1/31/2007 FL Treasure Coast University Charter School St. Lucie County School Board 21.865 Out School District Moody’s Aaa - Aa3 - Prager, Sealy Pledge Lee Charter Foundation 244 4/3/2007 FL Lee County Industrial Development Authority 82.165 Out Unenhanced S&P - BB - BB+ Wachovia 3 3 3 3 (Gateway Charter School) Hillsborough County Industrial Development 245 5/25/2007 FL Terrace Community Middle School 6.215 Out Unenhanced S&P - BBB- - BBB- D.A. Davidson 3 3 3 3 Authority 246 8/30/2007 FL Learning Gate Community School Florida Development Finance Corporation 7.475 Out Unenhanced S&P - BBB- - BBB- D.A. Davidson 3 3 3 3 247 9/27/2007 FL Palm Bay Academy Charter School Florida Development Finance Corporation 6.260 Out Unenhanced S&P - BB- - - D.A. Davidson 3 3 3 3 Royal Bank of Canada/ Fitch AAA 248 3/25/2008 FL Pembroke Pines Charter Schools City of Pembroke Pines 64.095 Mat/Ref - - - RBC Capital Markets Assured Moody’s Aaa Guaranty 249 9/30/2008 FL Sculptor Charter School Florida Development Finance Corporation 4.960 Out Unenhanced S&P - BBB- - BBB- D.A. Davidson 3 3 3 3 250 6/28/2010 FL Sarasota School of Arts and Sciences Sarasota County 11.040 Out Unenhanced S&P - BBB- - BBB- PNC 3 3 3 3 251 9/14/2010 FL Bay Haven Charter Academy Bay County 11.755 Out Unenhanced S&P - BBB - BBB Merchant Capital 3 3 3 252 10/20/2010 FL Renaissance Charter School Florida Development Finance Corporation 68.200 Out Unenhanced Fitch - BBB - BBB Ziegler 3 3 3 3 253 10/28/2010 FL Miami Community Charter School Capital Trust Agency 7.700 Out Unenhanced NR -- - - Piper Jaffray 3 Seminole County Industrial Development 254 12/10/2010 FL Choices in Learning Charter School 9.900 Out Unenhanced S&P - BBB- - BBB- PNC 3 3 3 3 Authority Moody’s Aa3 Aa3 255 3/17/2011 FL City’s Charter Schools City of Cape Coral 17.690 Out City Pledge - - PNC Fitch A+ A+ 256 6/30/2011 FL Renaissance Charter School Florida Development Finance Corporation 89.235 Out Unenhanced Fitch - BB+ - BB+ Ziegler 3 3 3 APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F 257 10/13/2011 FL Pinellas Preparatory Academy Pinellas County Educational Facilities Authority 8.880 Out Unenhanced Fitch - BBB- - BBB- PNC 3 3 3 258 11/30/2011 FL Bay Area Charter Foundation Florida Development Finance Corporation 37.990 Out Unenhanced NR -- -- Ziegler 3 3 3 259 2/16/2012 FL Sculptor Charter School Florida Development Finance Corporation 0.720 Out Unenhanced S&P - BBB- - BBB- FMSbonds 3 3 3 Assured Guaranty/ Moody’s Aa2 Aa2 260 3/19/2009 GA Lake Oconee Academy Greene County Development Authority 17.205 Out - - Morgan Keegan School District S&P AAA AA- Pledge 261 5/10/2011 3 GA Kennesaw Charter School Public Finance Authority 17.450 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 Joint Development Authority of DeKalb, Newton 262 8/30/2011 GA DeKalb Academy of Technology & the Environment 7.215 Out Unenhanced S&P - BBB- - BBB- D.A. Davidson 3 3 3 and Gwinnett Counties 263 11/3/2011 GA Fulton Science Academy Alpharetta Development Authority 18.930 Out Unenhanced Fitch - BBB - CC Merchant Capital 3 Wells Fargo 264 6/1/2002 ID Nampa Classical Academy Idaho Housing & Finance Association 2.485 Mat/Ref Moody’s Aa1 - -- Wells Fargo Bank Miller Johnson 265 8/1/2005 ID Pocatello Community Charter School Idaho Housing & Finance Association 2.480 Out Unenhanced NR -- -- 3 3 3 3 Steichen Kinnard 266 3/8/2007 ID Hidden Springs Charter School Idaho Housing & Finance Association 5.805 Mat/Ref Bank of America Moody’s Aa1/VMIG 1 - - - Banc of America 267 2/26/2008 ID Idaho Arts Charter School Idaho Housing & Finance Association 7.320 Out Unenhanced S&P - BB+ - BBB- Wachovia 3 3 3 3 268 5/29/2008 ID Liberty Charter School Idaho Housing & Finance Association 4.005 Out Unenhanced S&P - BBB - BBB Wachovia 3 3 3 3 269 7/23/2008 ID Victory Charter School Idaho Housing & Finance Association 3.965 Out Unenhanced S&P - BBB- - BBB- Wachovia 3 3 3 3 270 3/10/2009 ID North Star Charter School Idaho Housing & Finance Association 11.775 Out Unenhanced S&P - BB - BB Baird 3 3 3 271 7/8/2009 ID Victory Charter School Idaho Housing & Finance Association 0.855 Out Unenhanced S&P - BBB- - BBB- Baird 3 3 3 3 272 9/21/2010 ID Compass Public Charter School Idaho Housing & Finance Association 5.155 Out Unenhanced S&P - BBB- - BBB- Baird 3 3 3 3 273 5/2/2012 ID Idaho Arts Charter School Idaho Housing & Finance Association 2.175 Out Unenhanced S&P - BBB- - BBB- Baird 3 3 3 3 First National 274 6/24/1999 IL Noble Street Charter School City of Chicago 2.500 Mat/Ref NR -- -- Banc One Bank of Chicago Chicago Charter School Foundation 275 6/1/2002 IL Illinois Development Finance Authority 16.050 Mat/Ref Unenhanced S&P - BBB - - Kirkpatrick Pettis (Chicago International Charter School Basil) Aa3/ A1/ 276 7/17/2003 IL Perspectives Charter School Illinois Finance Authority 5.500 Out Harris NA Moody’s - - Loop Capital VMIG 1 VMIG 1 Aa3/ 277 9/16/2003 IL Learn Charter School Illinois Development Finance Authority 5.000 Mat/Ref Harris NA Moody’s - -- Harris Trust VMIG 1 8/30/2006 1 IL Noble Network of Charter Schools Illinois Finance Authority 11.525 Out ACA Financial S&P A - --RBC Capital Markets 3 3 3 278 8/30/2006 1 IL UNO Charter School Network Illinois Finance Authority 7.220 Mat/Ref ACA Financial S&P A - - - RBC Capital Markets Cambridge Lakes Learning Center 279 1/23/2007 IL Pingree Grove Village 10.565 Out Unenhanced NR -- -- William Blair 3 3 3 (Cambridge Lakes Charter School) 77 Appendix B 78 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F Chicago Charter School Foundation (Chicago 280 2/8/2007 IL Illinois Finance Authority 49.475 Out Unenhanced S&P - BBB - BBB+ D.A. Davidson 3 3 3 3 International Charter School Northtown Academy) Noble Network of Charter Schools 281 5/31/2007 IL Illinois Finance Authority 13.885 Out ACA Financial S&P A - - - RBC Capital Markets 3 3 3 (Golder College Prep) UNO Charter School Network 282 7/18/2007 IL Illinois Finance Authority 16.000 Mat/Ref ACA Financial S&P A - - - RBC Capital Markets (Officer Donald J. Marquez Charter School) 283 9/18/2008 IL Prairie Crossing Charter School Illinois Finance Authority 9.440 Mat/Ref Marshall & Ilsley Moody’s Aa3/VMIG 1 - - - BMO Capital Markets GKST 284 4/1/2009 IL Namaste Charter School Illinois Finance Authority 4.000 Out Unenhanced NR -- - - MB Financial Bank 3 285 7/13/2011 IL Cambridge Lakes Learning Center Pingree Grove Village 6.400 Out Unenhanced NR -- -- William Blair 3 3 3 3 286 10/26/2011 IL UNO Charter School Network Illinois Finance Authority 37.505 Out Unenhanced S&P - BBB- - BBB- Baird 3 3 3 Lighthouse Academies 287 2/11/2009 IN Indiana Finance Authority 15.435 Out Harris NA S&P A+/A-1 - A+/A-1 - BMO Capital Markets GKST (Monument, Gary, West Gary) 288 7/1/2009 IN Irvington Community School Indiana Finance Authority 8.145 Out Unenhanced S&P - BBB- - BBB- Baird 3 3 3 3 Additional 289 12/22/2009 IN Thea Bowman Leadership Academy Indiana Finance Authority 19.355 Out S&P - BBB- - BB+ RBC Capital Markets 3 3 3 Reserves 290 6/21/2011 LA Belle Chasse Academy Louisiana Public Facilities Authority 20.725 Out Unenhanced Fitch - BBB - BBB Ziegler 3 3 3 3 291 12/15/2011 LA Lake Charles Charter Academy Louisiana Public Facilities Authority 15.515 Out Unenhanced NR -- -- Ziegler 3 3 3 292 6/23/1999 MA Boston Renaissance Charter Public School Massachusetts Development Finance Agency 20.275 Mat/Ref BankBoston NR -- - - Tucker Anthony 293 8/29/2001 MA Boston Renaissance Charter School Massachusetts Development Finance Agency 24.700 Mat/Ref Fleet Bank NR -- - - Tucker Anthony 294 12/30/2003 MA Neighborhood House Charter School Massachusetts Development Finance Agency 7.100 Out Fleet Bank S&P A+/A-1 - A/A-1 - RBC Dain Rauscher 295 3/17/2005 MA Mystic Valley Regional Charter School Massachusetts Development Finance Agency 3.310 Mat/Ref Sovereign Bank S&P AA+/A-1+ - - - RBC Dain Rauscher 296 7/12/2006 MA Academy of the Pacific Rim Massachusetts Development Finance Agency 11.775 Out ACA Financial S&P A - -- Dougherty 3 3 3 3 Aa2/ Aa2/ 297 6/19/2008 MA Abby Kelley Foster Charter Public School Massachusetts Development Finance Agency 35.000 Out TD Banknorth Moody’s - - RBC Capital Markets VMIG 1 VMIG 1 298 6/30/2009 MA SABIS International Charter School Massachusetts Development Finance Agency 33.755 Out Unenhanced S&P - BBB - BBB PNC 3 3 3 299 3/15/2010 MA Lowell Middlesex Academy Charter School Massachusetts Development Finance Agency 2.610 Out Unenhanced NR -- -- Na 300 9/23/2010 MA Dorchester Collegiate Academy Charter School Massachusetts Development Finance Agency 1.080 Out Unenhanced NR -- - - Boston Private Bank 301 11/30/2010 MA Foxborough Regional Charter School Massachusetts Development Finance Agency 26.600 Out Unenhanced S&P - BBB - BBB Morgan Keegan 3 3 3 Maryland Health & Higher Educational Facilities Fitch BBB 302 3/16/2010 MD Patterson Park Public Charter School 13.665 Out Unenhanced - BBB - RBC Capital Markets 3 3 3 3 Authority S&P BBB- Manufacturers and Traders 303 8/1/2010 MD Baltimore Leadership School for Young Women Na 4.000 Out Unenhanced NR -- -- Trust Company 304 9/1/1998 MI Concord Academy, Petosky Concord Academy, Petosky 1.335 Mat/Ref Unenhanced NR -- - - Miller Johnson & Kuehn 305 9/1/1998 MI Summit Academy Summit Academy 4.110 Mat/Ref Unenhanced NR -- - - Miller Johnson & Kuehn APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F 306 10/1/1998 MI Concord Academy, Boyne Concord Academy, Boyne 2.175 Mat/Ref Unenhanced NR -- - - Miller Johnson & Kuehn 307 2/1/1999 MI Traverse Bay Community School Traverse Bay Community School 2.160 Mat/Ref Unenhanced NR -- - - Miller Johnson & Kuehn 308 4/1/1999 MI Countryside Charter School Countryside Charter School 2.780 Out Unenhanced NR -- - - Miller Johnson & Kuehn 3 3 3 3 309 5/1/1999 MI West Michigan Academy of Arts and Academics West Michigan Academy of Arts and Sciences 3.165 Mat/Ref Unenhanced NR -- - - Miller Johnson & Kuehn Mosaica Academy of Saginaw d/b/a Saginaw 310 6/1/1999 MI Mosaica Academy of Saginaw d/b/a Saginaw Prep 4.035 Out Unenhanced NR -- - - Miller Johnson & Kuehn 3 3 3 3 Prep 311 6/1/1999 MI Pansophia Academy Pansophia Academy 2.405 Out Unenhanced NR -- - - Miller Johnson & Kuehn 3 3 3 3 312 8/1/1999 MI Capitol Area Academy Capitol Area Academy 3.280 Default Unenhanced NR -- - - Miller, Johnson & Kuehn 313 8/1/1999 MI Island City Academy Island City Academy 1.755 Out Unenhanced NR -- - - Miller Johnson & Kuehn 3 3 3 3 314 10/1/1999 MI Center Academy Center Academy 3.960 Out Unenhanced NR -- - - Miller Johnson & Kuehn 3 3 3 3 315 2/1/2000 MI Black River Public School Black River Public School 5.770 Mat/Ref Unenhanced Moody’s - Baa3 - - Miller Johnson & Kuehn 316 2/1/2000 MI Grand Blanc Academy Grand Blanc Academy 5.605 Out Unenhanced NR -- - - Miller Johnson & Kuehn 3 3 3 3 317 5/1/2000 MI The Learning Center Academy The Learning Center Academy 1.825 Mat/Ref Unenhanced NR -- - - Miller Johnson & Kuehn 318 6/1/2000 MI Countryside Charter School Countryside Charter School 1.920 Out Unenhanced NR -- - - Miller Johnson & Kuehn 3 3 3 3 319 6/1/2000 MI Nataki Talibah Schoolhouse of Detroit Nataki Talibah Schoolhouse of Detroit 5.665 Mat/Ref Unenhanced NR -- - - Miller Johnson & Kuehn 320 6/1/2000 MI Sankofa Shule Sankofa Shule 2.555 Default Unenhanced Moody’s - Ba1 - - Miller Johnson & Kuehn 321 9/1/2000 MI George Washington Carver Academy George Washington Carver Academy 7.100 Out Unenhanced NR -- - - Miller, Johnson & Kuehn 3 3 3 3 322 9/1/2000 MI Plymouth Educational Center Charter School Plymouth Educational Center Charter School 2.540 Mat/Ref Unenhanced NR -- - - Miller Johnson & Kuehn 323 12/1/2000 MI Concord Academy, Petosky Concord Academy, Petosky 3.690 Mat/Ref Unenhanced NR -- - - Miller Johnson & Kuehn 324 12/1/2000 MI Summit Academy North Summit Academy North 3.590 Mat/Ref Unenhanced NR -- - - Miller Johnson & Kuehn Miller Johnson 325 1/1/2001 MI Summit Academy North Summit Academy North 8.955 Mat/Ref Unenhanced Moody’s - Baa3 - - Steichen Kinnard Miller Johnson 326 4/1/2001 MI Marshall Academy Marshall Academy 3.785 Mat/Ref Unenhanced NR -- -- Steichen Kinnard Michigan Early Elementary Center Miller Johnson 327 4/1/2001 MI Michigan Early Elementary Center 2.440 Out Unenhanced NR -- -- 3 3 3 3 (Cole Academy) Steichen Kinnard 5/16/2001 1 MI Detroit Academy of Arts & Sciences Michigan Municipal Bond Authority 30.900 Out Unenhanced Moody’s - Ba1 - Caa2 J.P. Morgan 3 3 3 3 328 5/16/2001 1 MI YMCA Service Learning Academy Michigan Municipal Bond Authority 12.100 Mat/Ref Unenhanced Moody’s - Ba1 - - J.P. Morgan Miller Johnson 329 6/1/2001 MI Landmark Academy Landmark Academy 3.465 Mat/Ref Unenhanced NR -- -- Steichen Kinnard Miller Johnson 330 6/1/2001 MI Pansophia Academy Pansophia Academy 0.685 Out Unenhanced NR -- -- 3 3 3 Steichen Kinnard Sauk Trail Academy Miller Johnson 331 6/1/2001 MI Sauk Trail Academy 2.480 Default Unenhanced NR -- -- (Hillsdale Preparatory School) Steichen Kinnard 79 Appendix B 80 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F Miller Johnson 332 8/1/2001 MI Concord Academy, Antrim Concord Academy, Antrim 2.810 Out Unenhanced NR -- -- 3 3 3 3 Steichen Kinnard Miller Johnson 333 9/1/2001 MI Summit Academy North Summit Academy North 1.050 Mat/Ref Unenhanced NR -- -- Steichen Kinnard Miller Johnson 334 10/1/2001 MI Discovery Elementary School Discovery Elementary School 1.820 Default Unenhanced NR -- -- Steichen Kinnard Miller Johnson 335 11/1/2001 MI Huron Academy Huron Academy 1.235 Out Unenhanced NR -- -- 3 3 3 3 Steichen Kinnard Miller Johnson 336 2/1/2002 MI New Beginnings Academy New Beginnings Academy 2.395 Out Unenhanced NR -- -- 3 3 3 3 Steichen Kinnard Miller Johnson 337 4/1/2002 MI The Learning Center Academy The Learning Center Academy 0.500 Mat/Ref Unenhanced NR -- -- Steichen Kinnard Miller Johnson 338 5/1/2002 MI Benton Harbor Charter School Benton Harbor Charter School 6.710 Out Unenhanced NR -- -- 3 3 3 3 Steichen Kinnard Miller Johnson 339 6/1/2002 MI Huron Academy Huron Academy 1.720 Out Unenhanced NR -- -- 3 3 3 3 Steichen Kinnard Miller Johnson 340 12/1/2002 MI Grand Traverse Academy Grand Traverse Academy 9.110 Mat/Ref Unenhanced NR -- -- Steichen Kinnard Miller Johnson 341 12/1/2002 MI Summit Academy North Summit Academy North 2.300 Mat/Ref Unenhanced NR -- -- Steichen Kinnard 342 2/1/2003 MI Cesar Chavez Academy Cesar Chavez Academy 9.875 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 343 3/1/2003 MI Star International Academy Star International Academy 12.375 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 344 6/1/2003 MI Allen Academy Allen Academy 9.500 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 Miller Johnson 345 7/1/2003 MI Concord Academy, Boyne Concord Academy, Boyne 0.645 Mat/Ref Unenhanced NR -- -- Steichen Kinnard 346 10/1/2003 MI Bay County Public School Academy Bay County Public School Academy 3.280 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 347 12/1/2003 MI Kalamazoo Advantage Academy Kalamazoo Advantage Academy 5.555 Default Unenhanced NR -- - - Herbert J. Sims 348 12/10/2003 MI West Michigan Academy of Environmental Science Michigan Public Educational Facilities Authority 2.615 Out Fifth Third Bank NR -- - - Fifth Third Securities 349 3/1/2004 MI Allen Academy Allen Academy 3.500 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 350 3/1/2004 MI Allen Academy Allen Academy 1.915 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 351 4/1/2004 MI Gaudior Academy Gaudior Academy 3.075 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 352 6/1/2004 MI Star International Academy Star International Academy 2.540 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 353 7/1/2004 MI William C. Abney Academy William C. Abney Academy 3.620 Mat/Ref Unenhanced NR -- - - Herbert J. Sims 354 10/28/2004 MI Holly Academy Michigan Public Educational Facilities Authority 3.800 Mat/Ref Fifth Third Bank NR -- - - Fifth Third Securities 355 12/1/2004 MI Merritt Academy Merritt Academy 3.010 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 356 6/1/2005 MI Cesar Chavez Academy Cesar Chavez Academy 6.115 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F 357 6/1/2005 MI Landmark Academy Landmark Academy 2.080 Mat/Ref Unenhanced NR -- - - Herbert J. Sims 358 8/9/2005 MI Chandler Park Academy Chandler Park Academy 7.420 Out Unenhanced S&P - BBB- - BBB A.G. Edwards 3 3 3 3 359 8/16/2005 MI Detroit Community High School Detroit Community High School 11.865 Out Unenhanced S&P - BB - B+ A.G. Edwards 3 3 3 3 360 9/1/2005 MI Trillium Academy Trillium Academy 7.200 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 361 9/20/2005 MI Summit Academy North Summit Academy North 26.595 Out Unenhanced S&P - BB+ - BB+ A.G. Edwards 3 3 3 3 362 10/1/2005 MI Charyl Stockwell Academy Charyl Stockwell Academy 12.805 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 363 10/1/2005 MI Marshall Academy Marshall Academy 4.230 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 364 11/1/2005 MI Woodland Park Academy Michigan Public Educational Facilities Authority 3.750 Out Fifth Third Bank NR -- - - Fifth Third Securities 365 12/1/2005 MI Allen Academy Allen Academy 2.000 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 366 12/6/2005 MI Plymouth Educational Center Charter School Plymouth Educational Center Charter School 13.850 Out Unenhanced S&P - BBB- - BBB- A.G. Edwards 3 3 3 3 367 12/13/2005 MI Old Redford Academy Michigan Public Educational Facilities Authority 11.100 Out Unenhanced S&P - BBB- - BBB- Nat City 3 3 3 368 12/20/2005 MI Summit Academy Summit Academy 6.855 Out Unenhanced S&P - BB+ - BB+ A.G. Edwards 3 3 3 3 369 2/1/2006 MI Grattan Academy Grattan Academy 3.800 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 370 2/14/2006 MI Michigan Technical Academy Michigan Public Educational Facilities Authority 6.950 Mat/Ref Unenhanced S&P - BB -- Nat City 371 5/1/2006 MI Walden Green Montessori Michigan Public Educational Facilities Authority 4.370 Out Unenhanced NR -- - - Fifth Third Securities 3 3 3 3 372 6/13/2006 MI Arts Academy in the Woods Michigan Public Educational Facilities Authority 1.855 Out Fifth Third Bank NR -- - - Fifth Third Securities 373 7/25/2006 MI Black River Public School Michigan Public Educational Facilities Authority 8.885 Out Unenhanced NR -- - - Fifth Third Securities 3 3 3 3 374 9/1/2006 MI Merritt Academy Merritt Academy 5.315 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 375 11/1/2006 MI Dr. Charles Drew Academy Dr. Charles Drew Academy 6.190 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 376 12/1/2006 MI Crescent Academy Crescent Academy 7.090 Default Unenhanced NR -- - - Herbert J. Sims 377 1/24/2007 MI Conner Creek Academy East Conner Creek Academy East 16.215 Out Unenhanced S&P - BB+ - BB- A.G. Edwards 3 3 3 3 378 3/13/2007 MI Byron Center Charter School Byron Center Charter School 3.145 Out Unenhanced NR -- - - Lake Forest Securities 3 3 3 3 379 3/13/2007 MI Grand Traverse Academy Grand Traverse Academy 16.200 Out Unenhanced S&P - BBB- - BB+ A.G. Edwards 3 3 3 3 380 6/1/2007 MI David Ellis Academy - West Michigan Public Educational Facities Authority 14.370 Out Unenhanced NR -- -- Na 3 381 6/12/2007 MI Richfield Public School Academy Michigan Public Educational Facilities Authority 6.435 Out Unenhanced S&P - BBB- - BBB- A.G. Edwards 3 3 3 3 382 6/19/2007 MI Crossroads Charter Academy Crossroads Charter Academy 5.590 Out Unenhanced S&P - BBB- - BBB- Lake Forest Securities 3 3 3 3 383 6/21/2007 MI Concord Academy, Boyne Concord Academy, Boyne 2.800 Out Unenhanced NR -- - - Gates Capital 3 384 7/1/2007 MI Landmark Academy Landmark Academy 1.960 Mat/Ref Unenhanced NR -- - - Herbert J. Sims 385 8/1/2007 MI Star International Academy Star International Academy 5.850 Out Unenhanced S&P - BB+ - BBB Herbert J. Sims 3 3 3 3 386 9/27/2007 MI Bradford Academy Michigan Public Educational Facilities Authority 17.300 Out Unenhanced NR -- - - Herbert J. Sims 3 387 10/2/2007 MI International Academy of Flint International Academy of Flint 17.175 Out Unenhanced S&P - BBB- - BBB- Fifth Third Securities 3 3 3 3 81 Appendix B 82 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F 388 11/1/2007 MI Trillium Academy Trillium Academy 5.065 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 389 11/20/2007 MI Nataki Talibah Schoolhouse of Detroit Michigan Public Educational Facilities Authority 6.415 Out Unenhanced NR -- - - Fifth Third Securities 3 3 3 3 390 12/20/2007 MI American Montessori Academy Michigan Public Educational Facilities Authority 3.900 Out Unenhanced NR -- - - Fifth Third Securities 3 3 3 3 391 6/19/2008 MI Advanced Technology Academy Advanced Technology Academy 13.455 Out Unenhanced S&P - BBB- - BBB- Wachovia 3 3 3 3 392 7/17/2008 MI Michigan Technical Academy Michigan Public Educational Facilities Authority 3.885 Mat/Ref Fifth Third Bank S&P AA-/A-1+ BB - - Fifth Third Securities 393 7/31/2008 MI Crescent Academy Michigan Public Educational Facilities Authority 3.200 Out Unenhanced NR -- - - Fifth Third Securities 3 3 3 3 394 8/1/2008 MI Chandler Park Academy Michigan Public Educational Facilities Authority 8.465 Out Unenhanced S&P - BBB - BBB Fifth Third Securities 3 3 3 3 395 6/9/2009 MI Bradford Academy Michigan Public Educational Facilities Authority 10.720 Out Unenhanced S&P - BBB- - CCC+ Fifth Third Securities 3 3 3 3 396 1/21/2010 MI Landmark Academy Michigan Public Educational Facilities Authority 15.290 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 3 397 1/28/2010 MI Madison Academy Michigan Public Educational Facilities Authority 7.110 Out Unenhanced NR -- - - Piper Jaffray 3 3 3 3 398 3/19/2010 MI New Branches School Michigan Public Educational Facilities Authority 2.410 Out Unenhanced S&P - BBB- - BBB- Stifel Nicolaus 3 3 3 3 399 4/27/2010 MI Oakland International Academy Michigan Public Educational Facilities Authority 3.005 Out Unenhanced S&P - BBB- - BBB- Stifel Nicolaus 3 3 3 3 400 4/28/2010 MI Dr. Joseph F. Pollack Academic Center of Excellence Michigan Public Educational Facilities Authority 8.390 Out Unenhanced S&P - BB+ - BB+ Piper Jaffray 3 3 3 3 401 7/2/2010 MI Madison Academy Michigan Finance Authority 3.845 Out Unenhanced NR -- - - Piper Jaffray 3 3 3 3 402 9/17/2010 MI Will Carleton Charter School Academy Will Carleton Charter School Academy 2.200 Out Unenhanced NR -- - - Stifel Nicolaus 3 3 3 3 403 9/29/2010 MI Hanley International Academy Michigan Finance Authority 5.785 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 3 404 11/17/2010 MI Old Redford Academy Michigan Finance Authority 14.285 Out Unenhanced NR -- -- Baird 3 3 3 405 11/30/2010 MI Universal Learning Academy Michigan Finance Authority 10.435 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 3 406 4/21/2011 MI Hope Academy Michigan Finance Authority 8.885 Out Unenhanced Fitch - BBB- - BBB- Baird 3 3 3 3 407 4/27/2011 MI Holly Academy Michigan Finance Authority 5.750 Out Unenhanced S&P - BBB- - BBB- Fifth Third Securities 3 3 3 3 408 6/6/2011 MI Summit Academy North Summit Academy North 5.825 Out Unenhanced S&P - BB+ - BB+ Piper Jaffray 3 3 3 3 409 8/9/2011 MI Voyageur Academy Michigan Finance Authority 17.935 Out Unenhanced S&P - BB - BB Piper Jaffray 3 3 3 410 11/22/2011 MI Creative Montessori Academy Michigan Finance Authority 4.995 Out Unenhanced S&P - BBB- - BBB- Fifth Third Securities 3 3 3 411 12/13/2011 MI Detroit Service Learning Academy Michigan Finance Authority 11.425 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 412 1/19/2012 MI Michigan Technical Academy Michigan Finance Authority 16.130 Out Unenhanced NR -- -- Baird 3 3 3 3 413 4/30/2012 MI Concord Academy - Petoskey Michigan Finance Authority 3.040 Out Unenhanced NR -- -- Fifth Third 3 3 3 3 414 12/29/1998 MN Community of Peace Academy St. Paul Housing & Redvelopment Authority 3.570 Mat/Ref Unenhanced NR -- -- Na 415 6/3/1999 MN Higher Ground Academy St. Paul Housing & Redvelopment Authority 6.400 Mat/Ref Unenhanced NR -- - - John G. Kinnard Acorn Dual Language Community Academy 416 6/15/1999 MN St. Paul Housing & Redevelopment Authority 2.000 Mat/Ref Unenhanced NR -- - - John G. Kinnard (now Achieve Language) 417 12/1/1999 MN Bluffview Montessori School Winona Port Authority 3.500 Mat/Ref Unenhanced NR -- - - John G. Kinnard 418 12/1/1999 MN Village School of Northfield City of Northfield 1.320 Default Unenhanced NR -- - - John G. Kinnard APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F 419 1/1/2000 MN New Spirit Schools St. Paul Housing & Redvelopment Authority 6.500 Mat/Ref Unenhanced NR -- - - John G. Kinnard 420 3/1/2000 MN Minnesota Business Academy St. Paul Housing & Redevelopment Authority 8.275 Mat/Ref Unenhanced NR -- - - John G. Kinnard 421 6/1/2000 MN El Colegio Charter School City of Minneapolis 2.515 Mat/Ref Unenhanced NR -- - - John G. Kinnard Miller Johnson 422 5/1/2001 MN Community of Peace Academy St. Paul Housing & Redvelopment Authority 11.045 Mat/Ref Unenhanced Moody’s - Baa3 - - Steichen Kinnard 423 6/1/2002 MN Math & Science Academy City of Woodbury 4.530 Out Unenhanced NR -- -- Dougherty 3 3 3 3 New Spirit Schools 424 11/1/2002 MN St. Paul Housing & Redevelopment Authority 6.895 Out Unenhanced Na - - -- Dougherty 3 3 3 3 (St. Paul City School) 425 11/1/2003 MN Achieve Language Academy St. Paul Housing & Redevelopment Authority 6.840 Out Unenhanced NR -- -- Dougherty 3 3 3 3 426 3/1/2004 MN PACT Charter School City of Ramsey 11.575 Out Unenhanced NR -- -- Dougherty 3 3 3 3 427 5/1/2004 MN Hope Community Academy St Paul Housing & Redevelopment Authority 6.600 Out Unenhanced NR -- -- Dougherty 3 3 3 3 428 6/1/2004 MN Higher Ground Academy St. Paul Housing & Redvelopment Authority 8.135 Out Unenhanced NR -- -- Dougherty 3 3 3 3 429 12/1/2004 MN Agricultural and Food Sciences Academy City of Vadnais Heights 8.900 Default Unenhanced NR -- -- Dougherty 430 7/1/2005 MN Minnesota Business Academy St. Paul Housing & Redevelopment Authority 6.580 Default Unenhanced NR -- -- Dougherty 431 10/1/2005 MN Hope Community Academy St. Paul Housing & Redevelopment Authority 5.750 Out Unenhanced NR -- -- Dougherty 3 3 3 3 Seed Daycare (Harvest Preparatory Charter School, Miller Johnson 432 1/25/2006 MN City of Minneapolis 7.000 Default US Bank NR -- -- Hmong Academy) Steichen Kinnard 433 5/1/2006 MN Lakes International Language Academy Pine City 8.200 Out Unenhanced NR -- -- Dougherty 3 3 3 3 434 9/1/2006 MN Hmong College Prep Academy St. Paul Housing & Redevelopment Authority 8.975 Out Unenhanced NR -- -- Dougherty 3 3 3 3 435 11/28/2006 MN Community of Peace Academy St. Paul Housing & Redvelopment Authority 17.245 Out Unenhanced S&P - BBB- - BBB- Dougherty 3 3 3 3 436 11/1/2007 MN Kaleidoscope Charter School City of Falcon Heights 8.610 Out Unenhanced NR -- -- Dougherty 3 3 3 3 437 11/15/2007 MN Bluffview Montessori School Winona Port Authority 5.055 Out Unenhanced NR -- -- Dougherty 3 3 3 3 438 8/1/2008 MN St. Croix Preparatory Academy Baytown Township 21.725 Out Unenhanced NR -- -- Dougherty 3 3 3 3 439 3/1/2009 MN Prairie Seeds Academy City of Brooklyn Park 15.770 Out Unenhanced NR -- -- Dougherty 3 3 3 3 440 7/1/2009 MN Higher Ground Academy St. Paul Housing & Redevelopment Authority 4.300 Out Unenhanced NR -- -- Dougherty 3 3 3 3 441 11/10/2010 MN Duluth Edison Charter Schools Duluth Housing & Redevelopment Authority 18.400 Out Unenhanced S&P - BBB- - BBB- Dougherty 3 3 3 3 442 10/18/2011 MN Nova Classical Academy St. Paul Housing & Redevelopment Authority 17.540 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 443 12/29/2011 MN World Learner School City of Chaska 3.415 Out Unenhanced S&P - BB+ - BB+ Dougherty 3 3 3 Fitch A BB BBB- 444 11/15/2002 MO St. Louis Charter School Missouri Health & Educational Facilities Authority 6.130 Out ACA Financial - Morgan Keegan 3 3 3 3 S&P A - - Aa1/ A2/ 445 1/30/2003 MO Academie Lafayette Missouri Health & Educational Facilities Authority 2.550 Out Bank of America Moody’s - - Banc of America Securities VMIG 1 VMIG 1 446 8/1/2006 MO Allen Village School Kansas City Industrial Development Authority 4.770 Out Unenhanced NR -- -- Na 3 83 Appendix B 84 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F 447 1/1/2007 MO Derrick Thomas Academy Charter School Kansas City Industrial Development Authority 10.615 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 448 2/14/2007 MO Confluence Academy St. Louis Industrial Development Authority 23.705 Out Unenhanced NR -- - - Stifel Nicolaus 3 3 3 3 449 7/18/2007 NC Magellan Charter School North Carolina Capital Facilities Finance Agency 5.000 Mat/Ref Wachovia Bank S&P AA/A-1+ - -- Wachovia 450 8/17/2007 NC Woods Charter School Virginia Small Business Financing Authority 9.870 Out Unenhanced NR -- -- Na 3 451 8/23/2007 NC Union Academy North Carolina Capital Facilities Finance Agency 6.175 Mat/Ref Wachovia Bank S&P AA/A-1+ - -- Ziegler 452 5/16/2008 NC Lake Norman Charter School North Carolina Capital Facilities Finance Agency 20.000 Out Wachovia Bank S&P AA/A-1 - AA-/A-1+ - Wachovia Branch Banking Aa2/ A1 453 3/18/2010 NC Sterling Montessori Academy & Charter School North Carolina Capital Facilities Finance Agency 10.610 Out Moody’s - - Zions First National Bank and Trust Co. VMIG 1 VMIG 1 454 6/21/2011 3 NC Thomas Jefferson Classical Academy Public Finance Authority 9.990 Out Unenhanced S&P - BBB- - BBB- RBC Capital Markets 3 3 3 3 Leap Academy University Rutgers 455 10/2/2003 NJ Delaware River Port Authority 8.500 Out Moody’s Aa3 - Aa2 - Wachovia 3 Charter School University 456 10/30/2007 NJ Teaneck Community Charter School Bergen County Improvement Authority 9.900 Out Unenhanced NR -- - - Gates Capital 3 3 3 3 457 12/24/2009 NJ Greater Brunswick Regional Charter School New Jersey Redevelopment Authority 6.550 Out Unenhanced NR -- - - Sun National Trust 458 5/20/2010 NJ Central Jersey Arts Charter School New Jersey Redevelopment Authority 8.200 Out Unenhanced NR -- - - Powell Capital 3 3 3 459 4/12/2012 NJ Paterson Charter School for Science and Technology New Jersey Economic Development Authority 11.945 Out Unenhanced S&P - BBB- - BBB- RBC Capital Markets 3 3 3 Kirkpatrick Pettis, 460 1/15/2006 NM Academy for Technology and the Classics Santa Fe County 6.735 Default Unenhanced NR -- -- D.A. Davidson 461 3 6/20/2008 NV Coral Academy of Science Pima County Industrial Development Authority 7.690 Out Unenhanced NR -- -- Wells Fargo 3 3 3 3 Central New York Charter School for Math and Miller Johnson 462 1/1/2002 NY Onondaga County Industrial Development Agency 6.600 Default Unenhanced NR -- -- Science Steichen Kinnard 463 5/1/2005 NY New Covenant Charter School Albany Industrial Development Agency 16.605 Default Unenhanced NR -- - - Herbert J. Sims 464 6/1/2005 NY Charter School for Applied Technologies Erie County Industrial Development Agency 21.940 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 465 3/30/2007 NY Brighter Choice Charter Schools Albany Industrial Development Agency 18.490 Out Unenhanced Fitch - BBB- - BBB- First Albany 3 3 3 3 466 10/1/2007 NY Global Concepts Charter School Erie County Industrial Development Agency 8.275 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 467 11/19/2010 NY Charter School of Educational Excellence Yonkers Economic Development Corporation 12.445 Out Unenhanced S&P - BB+ - BB Baird 3 3 3 3 Buffalo and Erie County Industrial Land 468 2/17/2011 NY Enterprise Charter School 7.345 Out Unenhanced Fitch - BBB - BBB M&T Securities 3 3 3 Development Corporation 469 3/30/2011 NY The Academy Charter School Hempstead Local Development Corporation 10.740 Out Unenhanced NR -- - - Siebert Brandford Shank 3 3 3 3 470 3/29/2012 3 NY Brighter Choice Charter Middle Schools Phoenix Industrial Development Authority 15.140 Out Unenhanced Fitch - BB+ - BB+ Jefferies 3 3 3 Additional Fitch BBB+ - 471 12/19/2007 OH Toledo School for the Arts Toledo-Lucas County Port Authority 3.750 Out - - Baird Reserves S&P - BBB+ 472 1/1/2008 3 OH Constellation Schools Pima County Industrial Development Authority 24.595 Out Unenhanced NR -- -- Dougherty 3 473 9/8/2011 3 OH New Plan Learning Pima County Industrial Development Authority 33.120 Out Unenhanced Fitch - BBB- - BBB- RBC Capital Markets 3 3 474 12/12/2007 OR Trillium Charter School Oregon Facilities Authority 3.395 Out Unenhanced NR -- -- Wells Fargo 3 3 3 3 APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F 475 11/9/2001 PA MaST Community Charter School Philadelphia Authority for Industrial Development 5.525 Mat/Ref Unenhanced NR -- -- Na 6/15/2002 2 PA Community Academy of Philadelphia Philadelphia Authority for Industrial Development 13.795 Mat/Ref ACA Financial S&P A - -- Advest 476 6/15/2002 2 PA Community Academy of Philadelphia Philadelphia Authority for Industrial Development 3.250 Mat/Ref Unenhanced NR -- -- Advest 477 10/15/2004 PA Collegium Charter School Chester County Industrial Development Authority 16.000 Out ACA Financial S&P A BB+ - BBB- Dolphin & Bradbury 3 3 3 Propel Schools Allegheny County Industrial Development 478 12/30/2004 PA 4.250 Out Unenhanced NR -- - - Kirkpatrick Pettis 3 3 3 (Homestead) Authority Westhoff, Cone & 479 7/21/2005 PA Leadership Learning Partners Charter School Philadelphia Authority for Industrial Development 10.700 Out Unenhanced S&P - BBB- -- 3 3 Holmstedt 480 11/1/2005 PA Renaissance Academy Chester County Industrial Development Authority 9.220 Out Unenhanced NR -- - - Herbert J. Sims 3 3 3 3 481 4/15/2006 PA Richard Allen Preparatory School Philadelphia Authority for Industrial Development 5.790 Out Unenhanced S&P - BB+ - BBB- Boenning & Scattergood 3 3 Municipal Capital 482 12/14/2006 PA Franklin Towne Charter High School Philadelphia Authority for Industrial Development 11.525 Mat/Ref Unenhanced S&P - BBB -- Markets Group 483 4/17/2007 PA School Lane Charter School Bucks County Industrial Development Authority 11.300 Out Unenhanced S&P - BBB - BBB PNC 3 3 3 484 7/18/2007 PA Russell Byers Charter School Philadelphia Authority for Industrial Development 7.810 Out Unenhanced S&P - BBB- - BBB- PNC 3 3 3 485 9/5/2007 PA First Philadelphia Charter School For Literacy Philadelphia Authority for Industrial Development 17.000 Out Unenhanced S&P - BBB- - BBB- PNC 3 3 3 486 9/27/2007 PA Independence Charter School Philadelphia Authority for Industrial Development 18.000 Out Unenhanced S&P - BBB- - BBB- PNC 3 3 3 487 12/28/2007 PA Avon Grove Charter School Chester County Industrial Development Authority 20.900 Out Unenhanced S&P - BB+ - BB+ PNC 3 3 3 3 488 2/25/2010 PA MaST Community Charter School Philadelphia Authority for Industrial Development 15.880 Out Unenhanced S&P - BBB+ - BBB+ PNC 3 3 3 BB+ BBB- Propel Schools Allegheny County Industrial Development 489 8/5/2010 PA 14.140 Out Unenhanced S&P - BBB- - BBB- PNC 3 3 (Montour, McKeesport, East) Authority BBB- BBB- Delaware County Industrial Development 490 10/19/2010 PA Chester Community Charter School 57.395 Out Unenhanced Fitch - BBB - BB D.A. Davidson 3 3 3 3 Authority 491 11/9/2010 PA Global Leadership Academy Charter School Philadelphia Authority for Industrial Development 13.875 Out Unenhanced S&P - BBB- - BBB- PNC 3 3 3 West Philadelphia Achievement Charter Elementary 492 5/6/2011 PA Philadelphia Authority for Industrial Development 7.850 Out Unenhanced S&P - BBB- - BBB- Janney 3 3 School 493 12/16/2011 PA Mariana Bracetti Academy Philadelphia Authority for Industrial Development 24.740 Out Unenhanced S&P - BBB- - BBB- PNC 3 3 494 3/15/2012 PA New Foundations School Philadelphia Authority for Industrial Development 14.000 Out Unenhanced S&P - BB+ - BB+ PNC 3 3 495 3/6/2012 PA Discovery Charter School Philadelphia Authority for Industrial Development 13.445 Out Unenhanced S&P - BBB- - BBB- Janney 3 3 3 Rhode Island Health & Education Building Citizens Bank of 496 10/1/2004 RI Kingston Hill Academy 3.050 Out S&P AA- - A - Banc of America Securities Corporation Rhode Island Rhode Island Health & Education Building 497 9/20/2007 RI CVS Highlander Charter School 7.000 Out Citizens Bank S&P AA-/A-1+ - A/A-1 - Banc of America Corporation South Carolina Jobs- Economic Development A3/ SunTrust Robinson 498 7/10/2008 SC Brashier Charter LLC 8.410 Out SunTrust Bank Moody’s Aa2/VMIG 1 - - Authority VMIG 2 Humphrey 85 Appendix B 86 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F North Hills Preparatory 499 1/1/2000 TX Fate Higher Educational Facilities Corporation 6.000 Mat/Ref Unenhanced Moody’s - Baa3 - - Coastal Securities (Uplift) 500 9/1/2001 TX Southwest Preparatory School Danbury Higher Education Authority 2.255 Mat/Ref Unenhanced NR -- -- Na West Houston Charter Alliance Miller Johnson 501 2/1/2002 TX Danbury Higher Education Authority 2.830 Default Unenhanced NR -- -- (Katy Creative Arts) Steichen Kinnard 502 2/15/2002 TX George Gervin Academy Danbury Higher Education Authority 5.145 Out ACA Financial S&P A - - - Coastal Securities 3 3 3 3 503 6/1/2003 TX Southwest Preparatory School Danbury Higher Education Authority 1.675 Mat/Ref Unenhanced NR -- - - Coastal Securities 504 3/4/2004 TX A.W. Brown Fellowship Charter School Heart of Texas Education Finance Corporation 4.450 Mat/Ref ACA Financial S&P A - - - William R. Hough 505 10/1/2004 TX Arlington Classics Academy Danbury Higher Education Authority 3.460 Mat/Ref Unenhanced NR -- - - Coastal Securities Texas Public Finance Authority, Charter School 506 12/1/2004 TX School of Excellence in Education 9.070 Out Unenhanced S&P - BB - BB+ Kirkpatrick Pettis 3 3 Finance Corporation 507 2/17/2005 TX A.W. Brown Fellowship Charter School Orchard Higher Education Finance Corporation 6.250 Mat/Ref ACA Financial S&P A - - - RBC Dain Rauscher North Hills Preparatory Moody’s - Baa3 Baa3 508 10/1/2005 TX Beasley Higher Education Finance Corporation 15.945 Out ACA Financial - Coastal Securities 3 3 3 3 (Uplift) S&P A - BBB- 509 6/1/2006 TX NYOS Charter School Orchard Higher Education Finance Corp 5.080 Out ACA Financial S&P A - - - Coastal Securities 3 3 3 3 510 7/1/2006 TX Faith Family Academy Charter School Cameron Education Corporation 16.640 Out ACA Financial S&P A BBB- - BBB- RBC Capital Markets 3 3 3 511 8/1/2006 TX A.W. Brown Fellowship Charter School Danbury Higher Education Authority 5.140 Mat/Ref ACA Financial S&P A BBB- - - RBC Capital Markets Texas Public Finance Authority, 512 8/1/2006 TX KIPP Inc. 35.415 Out ACA Financial S&P A BBB- - BBB RBC Capital Markets 3 3 3 3 Charter School Finance Corporation 513 9/1/2006 TX Seashore Center School (Island Foundation) Danbury Higher Education Authority 3.640 Out Unenhanced NR -- - - Coastal Securities 3 3 3 3 Burnham Wood Charter School, Texas Public Finance Authority, 514 10/4/2006 TX 8.525 Out Unenhanced NR -- -- Wells Fargo 3 3 3 3 Da Vinci School for Science and Arts Charter School Finance Corporation 515 11/1/2006 TX Southwest Winners Foundation La Vernia Higher Education Finance Corporation 9.470 Out ACA Financial S&P A - - - Coastal Securities 3 3 3 3 516 12/1/2006 TX Gateway Charter Academy Heart of Texas Education Finance Corporation 10.385 Out Unenhanced NR -- - - Coastal Securities 3 Harmony Schools Texas Public Finance Authority, 517 5/1/2007 TX 29.995 Out Unenhanced S&P - BB+ - BBB Coastal Securities 3 3 3 3 (Cosmos Foundation) Charter School Finance Corporation IDEA Public Schools (Donna, Quest, Frontier, Rio Texas Public Finance Authority, 518 5/1/2007 TX 37.095 Out ACA Financial S&P A BBB- - BBB+ A.G. Edwards 3 3 3 3 Grande Middle, Rio Grande Upper) Charter School Finance Corporation Peak Preparatory Texas Public Finance Authority, Moody’s Baa3 Baa3 519 8/1/2007 TX 10.380 Out Unenhanced - - A.G. Edwards 3 3 3 3 (Uplift) Charter School Finance Corporation S&P BBB- BBB- 520 1/1/2008 TX Golden Rule Charter School Danbury Higher Education Authority 8.100 Out Unenhanced S&P - BB+ - BB+ RBC Capital Markets 3 3 3 3 Amigos Por Vida, Friends for Life Public Charter 521 2/1/2008 TX La Vernia Higher Education Finance Corporation 10.350 Out Unenhanced NR -- - - Coastal Securities 3 3 3 3 School Harmony Schools 522 5/1/2008 TX La Vernia Higher Education Finance Corporation 31.055 Out Unenhanced NR -- - - Coastal Securities 3 3 3 3 (Cosmos Foundation) APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F Tejano Center Community Concerns 523 2/15/2009 TX Clifton Higher Education Finance Corporation 25.200 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 3 (Raul Yzaguirre School) 524 2/19/2009 TX Winfree Academy Charter School La Vernia Higher Education Finance Corporation 8.305 Out Unenhanced S&P - BBB- - BB+ RBC Capital Markets 3 3 3 3 Oak Cliff Academy, Tarrant County Cultural Education Finance 525 8/31/2009 TX 5.880 Out Unenhanced S&P - BBB- - BBB- Gates Capital 3 3 3 3 dba Trinity Basin Preparatory Corporation Third-party Fitch BBB BBB 526 11/19/2009 TX KIPP Inc. La Vernia Higher Education Finance Corporation 66.865 Out - - RBC Capital Markets 3 3 3 3 Guaranty S&P BBB BBB IDEA Public Schools (Donna, Frontier, Quest, Mission, 527 12/10/2009 TX City of Pharr Higher Education Finance Authority 29.625 Out Unenhanced S&P - BBB - BBB+ Baird 3 3 3 3 San Benito, San Juan, Alamo, Pharr) Texas Public Finance Authority, 528 3/25/2010 TX Nova Academy 6.375 Out Unenhanced S&P - BBB - BBB- RBC Capital Markets 3 3 3 3 Charter School Finance Corporation 529 4/8/2010 TX Uplift Education Clifton Higher Education Finance Corporation 56.835 Out Unenhanced S&P - BBB- - BBB- Baird 3 3 3 3 Harmony Schools Texas Public Finance Authority, 530 5/6/2010 TX 50.090 Out Unenhanced S&P - BBB - BBB Morgan Keegan 3 3 3 3 (Cosmos Foundation) Charter School Finance Corporation Texas Public Finance Authority, 531 8/4/2010 TX Odyssey Academy 9.955 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 3 Charter School Finance Corporation Texas Public Finance Authority, 532 10/20/2010 TX New Frontiers Charter School 3.620 Out Unenhanced S&P - BBB - BBB Baird 3 3 3 3 Charter School Finance Corporation Texas Public Finance Authority, 533 10/22/2010 TX Evolution Academy Charter School 4.815 Out Unenhanced S&P - BBB- - BB+ RBC Capital Markets 3 3 3 3 Charter School Finance Corporation 534 12/7/2010 TX IDEA Public Schools San Juan Higher Education Finance Authority 33.900 Out Unenhanced S&P - BBB - BBB+ Baird 3 3 3 3 535 12/21/2010 TX Arlington Classics Academy Arlington Higher Education Finance Corporation 16.405 Out Unenhanced S&P - BB+ - BB Piper Jaffray 3 3 3 3 536 3/2/2011 TX Lifeschool of Dallas La Vernia Higher Education Finance Corporation 39.260 Out Unenhanced S&P - BBB- - BBB- RBC Capital Markets 3 3 3 3 Newark Cultural Education Facilities Finance 537 4/28/2011 TX Eagle Advantage Schools d/b/a Advantage Academy 14.230 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 3 Corporation Harmony Schools 538 5/26/2011 TX Houston Higher Education Finance Corporation 58.930 Out Unenhanced S&P - BBB - BBB Morgan Keegan 3 3 3 3 (Cosmos Foundation) 539 5/27/2011 TX FOCUS Learning Academy Beasley Higher Education Finance Corporation 9.460 Out Unenhanced Fitch - BBB- - BBB- Piper Jaffray 3 3 3 3 Texas Public Finance Authority, 540 11/15/2011 TX Orenda Education 4.055 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 Charter School Finance Corporation 541 12/8/2011 TX IDEA Public Schools Clifton Higher Education Finance Corporation 26.480 Out Unenhanced S&P - BBB+ - BBB+ Baird 3 3 3 3 542 4/3/2012 TX Ser-Ninos Houston Higher Education Finance Corporation 4.475 Out Unenhanced S&P - BBB- - BBB- Stifel, Nicolaus 3 3 3 543 4/19/2012 TX Uplift Education North Texas Education Finance Corporation 80.780 Out Unenhanced S&P - BBB- - BBB- Baird 3 3 3 3 Harmony Schools Raymond James/ 544 5/1/2012 TX Houston Higher Education Finance Corporation 31.350 Out Unenhanced S&P - BBB - BBB 3 3 3 3 (Cosmos Foundation) Morgan Keegan 545 12/21/2005 UT Ranches Academy Utah County 1.440 Out Unenhanced NR -- -- Wells Fargo 87 Appendix B 88 Appendix B

APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F 546 11/8/2006 UT American Leadership Academy Spanish Fork City 25.170 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 KeyBank 547 12/21/2006 UT Monticello Academy West Valley City 6.500 Mat/Ref S&P A/A1 - -- KeyBanc National 548 12/21/2006 UT Monticello Academy West Valley City 4.500 Mat/Ref Unenhanced NR -- -- KeyBanc 549 4/12/2007 UT Freedom Academy Foundation Provo City 10.750 Out Unenhanced NR -- -- Baird 3 3 3 3 550 5/3/2007 UT East Hollywood High School West Valley City 6.225 Out Unenhanced NR -- -- Baird 3 3 3 3 551 5/3/2007 UT Monticello Academy West Valley City 11.000 Out Unenhanced NR -- -- KeyBanc 3 3 3 3 552 5/16/2007 UT The Walden School of Liberal Arts Utah County 3.975 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 553 5/30/2007 UT Lakeview Academy Utah County 9.605 Out Unenhanced NR -- - - Piper Jaffray 3 3 3 3 554 5/30/2007 UT Renaissance Academy Utah County 9.645 Out Unenhanced NR -- - - Piper Jaffray 3 3 3 3 555 7/17/2007 UT Lincoln Academy Utah County 10.035 Out Unenhanced NR -- -- Baird 3 3 3 3 556 10/30/2007 UT Ronald Wilson Reagan Academy Utah County 11.065 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 557 11/1/2007 UT Channing Hall Utah State Charter School Finance Authority 9.590 Out Unenhanced NR -- - - Piper Jaffray 3 3 3 3 558 11/28/2007 UT Fast Forward High School Utah State Charter School Finance Authority 3.127 Out Unenhanced NR -- -- Na 3 559 12/13/2007 UT Summit Academy Utah State Charter School Finance Authority 17.900 Out Unenhanced S&P - BBB- - BBB- D.A. Davidson 3 3 3 560 1/24/2008 UT Noah Webster Academy Utah State Charter School Finance Authority 9.800 Out Unenhanced NR -- -- Baird 3 3 3 3 561 7/15/2008 UT Entheos Academy Utah State Charter School Finance Authority 5.930 Out Unenhanced NR -- -- Na 3 562 8/19/2008 UT Rockwell Charter High School Utah State Charter School Finance Authority 14.100 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 563 8/26/2008 UT George Washington Academy Utah State Charter School Finance Authority 9.975 Out Unenhanced NR -- - - Piper Jaffray 3 3 3 3 564 11/20/2008 UT Venture Academy Utah State Charter School Finance Authority 7.305 Out Unenhanced NR -- -- Na 3 565 12/18/2008 UT Legacy Preparatory Academy #1 Utah State Charter School Finance Authority 5.780 Out Unenhanced NR -- -- Na 3 566 1/30/2009 UT Legacy Preparatory Academy #2 Utah State Charter School Finance Authority 7.800 Out Unenhanced NR -- -- Na 3 American Preparatory Academy and 567 3/9/2009 UT Utah State Charter School Finance Authority 6.900 Mat/Ref Unenhanced NR -- - - DEPFA First Albany The School for New Americans 568 3/30/2009 UT DaVinci Academy of Science and the Arts Utah State Charter School Finance Authority 6.950 Mat/Ref Unenhanced NR -- - - DEPFA First Albany 569 6/3/2010 UT Paradigm High School Utah State Charter School Finance Authority 9.540 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 3 570 6/28/2010 UT North Davis Preparatory Academy Utah State Charter School Finance Authority 15.335 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 3 571 9/21/2010 UT Navigator Pointe Academy Utah State Charter School Finance Authority 5.360 Out Unenhanced S&P - BBB - BBB Piper Jaffray 3 3 3 3 572 12/21/2010 UT North Star Academy Utah State Charter School Finance Authority 7.640 Out Unenhanced S&P - BBB- - BBB- Piper Jaffray 3 3 3 3 573 12/21/2010 UT Oquirrh Mountain Charter School Utah State Charter School Finance Authority 12.090 Out Unenhanced NR -- - - Piper Jaffray 3 3 3 3 574 12/23/2010 UT Hawthorn Academy Utah State Charter School Finance Authority 13.495 Out Unenhanced NR -- - - Piper Jaffray 3 3 3 3 575 12/30/2010 UT Early Light Academy Utah State Charter School Finance Authority 13.330 Out Unenhanced NR -- - - Piper Jaffray 3 3 3 3 APPENDIX B: CHARTER SCHOOL BOND ISSUANCE $ Par Credit Rating Rating at Issuance Current Rating Universe Dated Date State School Issuer Millions Status Enhancement Agency Enhanced Unenhanced Enhanced Unenhanced Lead Manager D C P F 576 2/9/2011 UT George Washington Academy Utah State Charter School Finance Authority 5.890 Out Unenhanced S&P - BB+ - BB+ Piper Jaffray 3 3 3 3 577 5/10/2011 UT Summit Academy High School Utah State Charter School Finance Authority 15.930 Out Unenhanced NR -- - - D.A. Davidson 3 3 3 3 578 6/28/2011 UT Da Vinci Academy of Science and the Arts Utah State Charter School Finance Authority 7.770 Out Unenhanced S&P - BBB- - BBB- Zions Bank 3 3 3 579 8/5/2011 UT Karl G. Maeser Preparatory Academy Utah State Charter School Finance Authority 10.345 Out Unenhanced S&P - BBB- - BBB- Zions First National Bank 3 3 3 Vista at Entrada School of Performing Arts and 580 3/8/2012 UT Utah State Charter School Finance Authority 13.310 Out Unenhanced S&P - BB+ - BB+ Ziegler 3 3 3 Technology 581 5/17/2012 UT Salt Lake Arts Academy Utah State Charter School Finance Authority 4.610 Out Unenhanced S&P - BB - BB D.A. Davidson 3 3 3 582 6/28/2005 WI Milwaukee Academy of Science Milwaukee City Redevelopment Authority 12.260 Out Unenhanced S&P - BB+ - BBB- A.G. Edwards 3 3 3 583 4/24/2007 WI Academy of Learning and Leadership Milwaukee City Redevelopment Authority 8.650 Default Unenhanced NR -- - - A.G. Edwards Total 6,441.350

General Methodology & Terminology Notes -- Issues are arranged by state in chronological ascending order. 1 Series is part of a single issue with two series for different charter school borrowers. -P- ar amounts include both taxable and tax-exempt portions of an issuance, as applicable. 2 Series is part of a single issue that consists of two series with different ratings and/or disclosure. -- “Status” refers to transactional status. “Out” means outstanding, “Mat/Ref” means refunded, and “Default” means defaulted. 3 Bonds issued by an out-of-state issuer. Transactions are color-coded by status, with refunded in blue and defaulted in red. -- “NR” means not rated. A downloadable spreadsheet is available at http://www.lisc.org/effc/bondhistoryv2. -- “Na” means not available. -- “Fitch” is Fitch Ratings; “Moody’s” is Moody’s Investors Service; “S&P” is Standard & Poor’s. -- For the purposes of this study, an “enhanced” rating is a rating stemming from additional credit enhancement or some other security pledge in addition to the revenues from the charter school itself. An “unenhanced” rating is an underlying rating of the charter school rather than that of any other security which may be considered as part of the issue. -- “Current Ratings” are those as of May 19, 2012. -- National Finance Guarantee Corp. was formerly MBIA Insurance Corp. of Illinois and is listed here as “National (MBIA).” -- Syncora Guarantee Inc. was formerly XL Capital Assurance Inc. and is listed here as “Syncora (XL).” -- A check in the “D” column indicates that the offering was part of the universe of 393 offerings included in the disclosure analysis. -- A check in the “C” column indicates that the offering was part of the universe of 379 offerings included in the credit characteristics at issuance analysis. -- A check in the “P” column indicates that the offering was part of the universe of 309 offerings included in the pro forma analysis. -- A check in the “F” column indicates that the offering was part of the universe of 298 schools with 354 outstanding issuances included in the current financial metrics analysis. 89 Appendix B 90 Appendix C PENDIX A p APPENDIX C: CREDIT CHARACTERISTICS AT ISSUANCE

Medians by Investment Grade Category C # of Par Age Enrollment Waitlist DSCR Debt Burden Category Issues Millions Median Count Median Count Median Count Median Count Median Count Investment Grade 155 $2,529.9 9.0 155 713 155 52% 115 1.53 111 11.4% 111 Non-Investment Grade 39 $632.2 7.1 39 786 39 33% 33 1.42 32 14.2% 32 Unrated 185 $1,524.4 3.9 185 380 185 23% 76 1.52 166 13.9% 166 All 379 $4,686.5 6.4 379 554 379 37% 224 1.53 309 13.4% 309

Issuance and Credit Characteristics by School Age # of Par Inv Non-Inv Unrated Enrollment Waitlist DSCR Debt Burden Age Issues Millions Grade % Grade % % Median Count Median Count Median Count Median Count Pre-opening 15 $161.1 0% 0% 100% 0 15 Na 0 1.72 13 15.2% 13 0 – 1.0 9 $77.5 0% 0% 100% 390 9 62% 1 1.57 7 16.5% 7 1.1 – 2.0 24 $218.0 0% 4% 96% 420 24 36% 12 1.49 23 15.6% 23 2.1 – 3.0 29 $188.1 0% 10% 90% 377 29 23% 12 1.54 25 13.6% 25 3.1 – 4.0 36 $476.9 28% 8% 64% 484 36 33% 21 1.57 29 14.5% 29 4.1 – 5.0 26 $282.9 54% 12% 35% 595 26 32% 14 1.38 19 13.8% 19 5.1 – 7.5 73 $849.1 44% 15% 41% 554 73 49% 46 1.57 55 13.9% 55 7.6 – 10.0 74 $819.8 54% 12% 34% 626 74 36% 52 1.57 62 11.6% 62 >10.0 93 $1,613.0 63% 10% 27% 726 93 31% 66 1.65 76 12.8% 76 All 379 $4,686.5 41% 10% 49% 554 379 37% 224 1.53 309 13.4% 309 APPENDIX C: CREDIT CHARACTERISTICS AT ISSUANCE

Issuance and Credit Characteristics by Enrollment # of Par Inv Non-Inv Unrated Age Waitlist DSCR Debt Burden Enrollment Issues Millions Grade % Grade % % Median Count Median Count Median Count Median Count New School 15 $161.1 0% 0% 100% -0.5 15 Na 0 1.72 13 13.2% 13 <250 40 $188.7 5% 5% 90% 5.8 40 41% 13 1.60 34 13.8% 34 250 – 499 106 $741.8 26% 8% 65% 4.9 106 37% 63 1.53 85 13.7% 85 500 – 749 95 $872.6 54% 8% 38% 6.8 95 35% 66 1.53 79 13.5% 79 750 – 999 45 $622.7 44% 24% 31% 7.1 45 29% 28 1.47 35 13.4% 35 1,000 – 1,499 45 $762.3 62% 11% 27% 7.8 45 34% 29 1.48 31 12.8% 31 1,500 – 2,499 13 $381.4 62% 23% 15% 11.2 13 35% 11 1.58 12 9.3% 12 2,500 – 4,999 12 $595.4 83% 8% 8% 11.2 12 75% 8 1.40 12 9.7% 12 >5,000 8 $360.6 100% 0% 0% 10.5 8 130% 6 1.68 8 12.0% 8 All 379 $4,686.5 41% 10% 49% 6.4 379 37% 224 1.53 309 13.4% 309

Issuance and Credit Characteristics by Waitlist # of Par Inv Non-Inv Unrated Age Enrollment DSCR Debt Burden Waitlist Issues Millions Grade % Grade % % Median Count Median Count Median Count Median Count 0% – 10% 35 $395.2 31% 14% 54% 9.3 35 552 35 1.47 29 13.7% 29 11% – 20% 35 $414.6 51% 9% 40% 8.0 35 650 35 1.52 29 14.0% 29 21% – 30% 30 $476.1 37% 17% 47% 6.9 30 657 30 1.38 25 15.8% 25 31% – 40% 20 $269.8 50% 35% 15% 7.4 20 773 20 1.56 17 10.9% 17 41% – 50% 18 $154.5 39% 17% 44% 7.8 18 411 18 1.56 15 13.2% 15 51% – 75% 22 $334.0 55% 9% 36% 6.4 22 601 22 1.64 20 14.0% 20 76% – 100% 18 $416.0 89% 6% 6% 6.9 18 635 18 1.39 11 13.9% 11 101% – 200% 28 $470.5 57% 18% 25% 8.8 28 945 28 1.59 17 12.1% 17 >200% 18 $177.2 78% 11% 11% 8.2 18 488 18 1.95 10 12.8% 10 Na 155 $1,578.6 26% 4% 70% 5.0 155 445 155 1.53 136 13.2% 136 All 379 $4,686.5 41% 10% 49% 6.4 379 554 379 1.53 309 13.4% 309 91 Appendix C 92 Appendix C

APPENDIX C: CREDIT CHARACTERISTICS AT ISSUANCE

Issuance and Credit Characteristics by DSCR # of Par Inv Non-Inv Unrated Age Enrollment Waitlist Debt Burden DSCR Issues Millions Grade % Grade % % Median Count Median Count Median Count Median Count <1.00x 3 $19.5 0% 0% 100% 4.5 3 665 3 23% 2 13.9% 3 1.00x – 1.19x 24 $309.8 21% 13% 67% 7.6 24 587 24 18% 14 14.2% 24 1.20x – 1.39x 86 $1,215.7 38% 13% 49% 5.8 86 577 86 30% 45 14.6% 86 1.40x – 1.59x 66 $917.1 42% 8% 50% 7.4 66 601 66 32% 42 13.6% 66 1.60x – 1.99x 74 $656.2 24% 11% 65% 6.5 74 440 74 34% 41 13.2% 74 2.00x – 2.99x 41 $589.8 54% 7% 39% 6.1 41 578 41 44% 21 10.7% 41 3.00x+ 15 $157.2 33% 13% 53% 6.7 15 603 15 35% 8 9.1% 15 No Pro formas 70 $821.2 63% 10% 27% 6.3 70 546 70 76% 51 Na 70 All 379 $4,686.5 41% 10% 49% 6.4 379 554 379 37% 224 13.4% 379

Issuance and Credit Characteristics by Debt Burden # of Par Inv Non-Inv Unrated Age Enrollment Waitlist DSCR Debt Burden Issues Millions Grade % Grade % % Median Count Median Count Median Count Median Count <5% 4 $41.1 25% 50% 25% 4.4 4 991 4 34% 2 2.99 4 5% – 9.99% 60 $783.2 60% 5% 35% 8.4 60 652 60 32% 36 1.84 60 10% – 11.99% 49 $491.6 51% 2% 47% 7.0 49 626 49 38% 26 1.59 49 12% – 14.99% 95 $1,300.9 28% 14% 58% 6.8 95 564 95 40% 48 1.46 95 15% – 19.99% 77 $942.9 25% 13% 62% 5.4 77 435 77 24% 46 1.43 77 20%+ 24 $305.6 13% 13% 75% 2.1 24 584 24 38% 15 1.35 24 No Pro formas 70 $821.2 63% 10% 27% 6.3 70 546 70 76% 51 Na 70 All 379 $4,686.5 41% 10% 49% 6.4 379 554 379 37% 224 13.4% 379 APPENDIX C: CREDIT CHARACTERISTICS AT ISSUANCE

Issuance and Credit Characteristics by Rating # of % of Par Age Enrollment Waitlist DSCR Debt Burden Rating Issues Issues Millions Median Count Median Count Median Count Median Count Median Count BBB+/Baa1 4 1% $67.1 10.9 4 873 4 149% 3 1.39 1 11.2% 1 BBB/Baa2 37 10% $1,011.2 9.7 37 1,290 37 77% 26 1.54 26 10.9% 26 BBB-/Baa3 114 30% $1,451.6 8.6 114 676 114 41% 86 1.54 84 11.5% 84 BB+/Ba1 28 7% $440.1 6.9 28 806 28 33% 23 1.36 22 14.4% 22 BB/Ba2 9 2% $179.9 6.8 9 818 9 41% 8 1.78 8 13.3% 8 BB-/Ba3 2 1% $12.2 8.6 2 338 2 32% 2 1.51 2 16.8% 2 Unrated 185 49% $1,524.4 3.9 185 380 185 23% 76 1.52 166 13.9% 166 All 379 100% $4,686.5 6.4 379 554 379 37% 224 1.53 309 13.4% 309

A downloadable spreadsheet is available at http://www.lisc.org/effc/bondhistoryv2. 93 Appendix C 94 Appendix D PENDIX A p APPENDIX D: CURRENT FINANCIAL METRICS

Medians by Bond Rating Status D All Rated Unrated Financial Metric Median Count Median Count Median Count Total Debt Outstanding $4,302,174,409 298 $2,909,504,020 143 $1,392,670,389 155 Enrollment 646 298 798 143 501 155 Bonds Outstanding $8,617,500 298 $11,143,503 143 $7,055,000 155 Debt Outstanding $9,215,000 298 $11,515,000 143 $7,627,730 155 Bond DSCR 1.45x 235 1.63x 118 1.33x 117 All Debt DSCR 1.41X 294 1.56x 140 1.33x 154 Bond MADS Coverage 1.37x 284 1.46x 138 1.30x 146 Debt Burden - All Debt 12.7% 294 10.7% 140 13.4% 154 Debt Burden - MADS 13.0% 284 12.1% 138 13.3% 146 Total Revenue $5,347,856 298 $6,847,432 143 $4,188,241 155 Total Expenses $4,264,998 298 $5,740,441 143 $3,452,863 155 Net Income $975,547 298 $1,294,236 143 $774,811 155 Actual Debt Service $651,192 298 $785,887 143 $595,776 155 Total Unrestricted Cash & Investments $776,714 297 $1,297,473 142 $517,990 155 DCOH - Unrestricted 58 297 70 142 48 155 DCOH - All 99 298 113 143 75 155 Total Unrestricted Cash & Equivalents as % of Debt Outstanding 9.0% 297 11.9% 142 6.8% 155 Net Assets $861,387 297 $1,737,123 142 $476,997 155 % Change in Net Assets 10.9% 295 12.2% 140 8.6% 155 Net Debt to Net Available Income 8.6x 298 8.4x 143 8.7x 155 Revenue per Student $8,124 291 $8,116 139 $8,154 152 Expense per Student $6,875 298 $6,934 143 $6,789 155 Debt Service per Student $1,030 298 $927 143 $1,147 155 Debt per Student $14,641 298 $14,648 143 $14,293 155 APPENDIX D: CURRENT FINANCIAL METRICS

Medians by State Arizona California Colorado Florida Michigan Minnesota New York Pennsylvania Texas Utah Financial Metric Median Count Median Count Median Count Median Count Median Count Median Count Median Count Median Count Median Count Median Count Debt Outstanding $588,096,930 52 $214,484,955 6 $561,688,339 54 $262,301,928 13 $516,228,563 56 $156,187,152 14 $77,875,000 6 $183,913,813 10 $830,234,477 24 $291,248,645 27 Enrollment 633 52 1247 6 514 54 680 13 525 56 622 14 485 6 861 10 859 24 668 27 Bonds Outstanding $7,675,000 52 $17,290,000 6 $7,205,000 54 $11,040,000 13 $6,055,000 56 $9,682,500 14 $11,592,500 6 $14,800,000 10 $9,760,000 24 $9,540,000 27 Debt Outstanding $7,786,340 52 $17,428,397 6 $7,218,230 54 $11,152,625 13 $6,268,077 56 $10,129,482 14 $11,592,500 6 $14,800,000 10 $10,094,610 24 $10,047,819 27 Bond DSCR 1.23x 45 1.90x 4 1.26x 54 1.68x 13 1.48x 42 1.54x 14 4.34x 6 1.67x 9 2.31x 16 1.28x 18 Add Debt DSCR 1.21x 52 1.66x 5 1.21x 54 1.68x 13 1.43x 56 1.47x 14 4.28x 6 1.72x 10 2.06x 23 1.26x 26 Bonds MADS Coverage 1.19x 51 1.15x 6 1.20x 54 1.44x 12 1.56x 54 1.43x 14 1.83x 6 1.41x 10 1.77x 23 1.25x 26 Debt Burden - All Debt 14.4% 52 8.8% 5 14.3% 54 12.9% 13 11.4% 56 13.2% 14 6.9% 5 9.1% 10 6.8% 23 17.5% 26 Debt Burden - MADS 14.9% 51 17.5% 6 14.4% 54 13.2% 12 10.6% 54 12.5% 14 12.3% 6 9.5% 10 9.2% 23 18.9% 26 Total Revenue $4,650,589 52 $9,404,340 6 $4,034,040 54 $5,867,304 13 $4,992,231 56 $6,901,495 14 $7,647,715 6 $11,891,167 10 $10,007,032 24 $4,053,477 27 Total Expenses $3,945,618 52 $8,463,345 6 $3,333,277 54 $4,933,391 13 $4,211,322 56 $5,439,829 14 $6,005,824 6 $9,312,952 10 $7,984,582 24 $3,117,654 27 Net Income $759,878 52 $1,306,406 6 $708,326 54 $1,027,999 13 $742,346 56 $1,404,052 14 $1,703,411 6 $2,150,573 10 $1,739,192 24 $957,289 27 Annual Debt Service $712,822 52 $567,607 6 $522,936 54 $606,175 13 $487,091 56 $746,849 14 $393,578 6 $1,188,076 10 $741,500 24 $663,181 27 Total Unresticted Cash & $535,847 52 $598,960 6 $1,039,600 54 $1,156,660 13 $353,321 56 $462,144 14 $1,415,413 6 $2,090,738 10 $1,580,772 24 $584,987 27 Investments DCOH - Unrestricted 35 52 35 6 90 54 82 13 40 56 33 14 102 6 62 10 69 24 58 27 DCOH- All 57 52 78 6 158 54 122 13 71 56 57 14 205 6 125 10 97 24 114 27 Total Unresticted Cash and Equivalents as % of Debt 6.0% 52 7.6% 6 12.0% 54 11.4% 13 7.2% 56 4.7% 14 16.6% 6 12.1% 10 16.8% 24 6.2% 27 Outstanding Net Assets $55,164 52 $3,632,683 6 $878,183 54 $1,713,309 13 $601,889 56 $1,099,353 14 $1,851,773 6 $6,119,425 10 $3,336,430 24 $412,105 27 % Change in Net Assets 2.8% 52 8.6% 6 5.8% 54 6.9% 12 12.2% 56 13.8% 14 48.1% 6 6.6% 10 20.0% 24 11.4% 27 Net Debt to Net Available 9.0x 52 12.4x 6 10.4x 54 10.7x 13 7.9x 56 7.4x 14 6.6x 6 8.8x 10 6.1x 24 10.0x 27 Income Revenue per Student $7,657 48 $7,693 6 $7,168 54 $7,425 13 $8,948 56 $11,144 14 $14,662 6 $12,799 10 $10,382 24 $6,353 27 Expense per Student $6,055 52 $6,784 6 $6,114 54 $6,075 13 $7,401 56 $8,502 14 $11,853 6 $10,364 10 $8,539 24 $4,782 27 Debt Service per Student $1,173 52 $573 6 $1,034 54 949 13 $1,012 56 $1,524 14 638 6 $1,144 10 $756 24 $1,124 27 Debt per Student $14,312 52 $18,026 6 $14,746 54 $16,311 13 $12,435 56 $18,649 14 $22,684 6 $17,707 10 $12,616 24 $15,626 27 95 Appendix D 96 Appendix D

APPENDIX D: CURRENT FINANCIAL METRICS

Medians by Underlying Rating Category All Ratings Investment Grade Investment Grade Financial Metric Median Count Median Count Median Count Total Debt Outstanding $2,606,792,812 123 $2,115,178,947 102 $491,613,865 21 Enrollment 824 123 754 102 1,120 21 Bonds Outstanding $11,143,503 123 $10,212,500 102 $15,630,000 21 Debt Outstanding $11,515,000 123 $10,887,500 102 $16,360,000 21 Bond DSCR 1.67x 102 1.67x 84 1.56x 18 All Debt DSCR 1.65x 120 1.67x 99 1.45x 21 Bond MADS Coverage 1.51x 120 1.53x 100 1.24x 20 Debt Burden - All Debt 10.2% 120 10.4% 99 9.5% 21 Debt Burden - MADS 11.6% 120 11.4% 100 14.0% 20 Total Revenue $7,388,642 123 $6,596,197 102 $9,570,996 21 Total Expenses $5,802,223 123 $5,676,954 102 $7,531,222 21 Net Income $1,255,527 123 $1,248,589 102 $1,372,397 21 Actual Debt Service $732,813 123 $688,480 102 $1,031,504 21 Total Unrestricted Cash & Investments $1,324,263 122 $1,383,757 101 $728,005 21 DCOH - Unrestricted 64 122 72 101 42 21 DCOH - All 109 123 112 102 94 21 Total Unrestricted Cash & Equivalents as % of Debt Outstanding 11.7% 122 12.6% 101 5.8% 21 Net Assets $1,737,123 122 $2,016,875 101 $803,880 21 % Change in Net Assets 12.2% 120 13.3% 99 5.3% 21 Net Debt to Net Available Income 8.2x 123 7.8x 102 9.1x 21 Revenue per Student $8,382 121 $8,186 100 $8,503 21 Expense per Student $7,106 123 $7,104 102 $7,229 21 Debt Service per Student $875 123 $873 102 $875 21 Debt per Student $14,382 123 $14,079 102 $16,337 21

A downloadable spreadsheet is available at http://www.lisc.org/effc/bondhistoryv2. PENDIX A p APPENDIX E: DEFAULTED CHARTER SCHOOL BONDS Age at Default from Dated $ Par Lead Initial Year Default Issuance Issuance Enroll- All-In School, Issuer Date State Millions Underwriter Rating Opened Year (Years) (Years) ment Waitlist Cost DSCR Debt Burden E Capitol Area Academy, 1 8/1/1999 MI 3.280 Miller, Johnson & Kuehn NR 1999 2011 (0.1) 12.0 0 Na 7.79% 4.67 7.2% Capitol Area Academy Village School of Northfield, 2 12/1/1999 MN 1.320 John G. Kinnard NR 1997 2007 2.3 7.5 57 14% 8.74% 1.54 19.3% City of Northfield Sankofa Shule, 3 6/1/2000 MI 2.555 Miller Johnson & Kuehn Ba1 1995 2007 4.8 7.1 149 Na 8.95% 1.64 13.1% Sankofa Shule Sauk Trail Academy (now Hillside Prep), 4 6/1/2001 MI 2.480 Miller Johnson Steichen Kinnard NR 1997 2004 3.8 2.8 132 Na 9.13% 2.90 9.2% Sauk Trail Academy Life School College Preparatory, 5 8/17/2001 AZ 12.000 Wedbush Morgan NR 1999 2007 6.0 5.9 1,025 Na 8.70% 1.67 16.4% Pima County Industrial Development Authority Discovery Elementary School, 6 10/1/2001 MI 1.820 Miller Johnson Steichen Kinnard NR 1996 2009 5.1 7.7 127 Na 9.43% 1.53 14.7% Discovery Elementary School Central New York Charter School for Math and Science, 7 1/1/2002 NY 6.600 Miller Johnson Steichen Kinnard NR 2000 2005 1.3 3.6 490 Na Na 1.98 12.2% Onondaga County Industrial Development Authority West Houston Charter Alliance, Inc. (Katy Creative Arts), 8 2/1/2002 TX 2.830 Miller Johnson Steichen Kinnard NR 1996 2005 5.4 3.4 195 Na 9.20% 2.73 14.8% Danbury Higher Education Authority Kalamazoo Advantage Academy, 9 12/1/2003 MI 5.555 Herbert J. Sims NR 1998 2008 5.3 4.7 409 Na 8.66% 1.11 10.2% Kalamazoo Advantage Academy Denver Arts & Technology Academy (now Cesar Chavez Academy 10 12/3/2003 CO 8.415 Kirkpatrick Pettis NR 2000 2009 3.3 5.5 347 28% 8.30% Na Na Denver), Colorado Educational and Cultural Facililties Authority Desert Technology Schools, 11 2/1/2004 AZ 3.585 Dougherty NR 1998 2008 5.4 4.2 222 Na 8.53% 2.05 14.2% Pima County Industrial Development Authority Agricultural and Food Sciences Academy, 12 12/1/2004 MN 8.900 Dougherty NR 2002 2009 3.3 5.0 155 Na 7.25% 1.37 19.1% City of Vadnais Heights New Covenant Charter School, 13 5/1/2005 NY 16.605 Herbert J. Sims NR 1999 2007 5.7 1.9 783 Na 8.34% 1.50 12.5% Albany Industrial Development Agency Minnesota Business Academy, 14 7/1/2005 MN 6.580 Dougherty NR 2000 2006 4.8 0.8 292 Na 7.37% 1.29 15.3% St. Paul Housing & Redevelopment Authority Premier Charter High School & Air Academy Charter High School, 15 9/1/2005 AZ 10.895 Dougherty NR 2001 2008 4.0 2.8 457 Na 7.75% N/A N/A Pima County Industrial Development Authority Academy for Technology and the Classics, 16 1/15/2006 NM 6.735 Kirkpatrick Pettis, D.A. Davidson NR 2001 2012 4.4 6.3 230 46% 7.00% 1.50 12.7% Santa Fe County Seed Daycare (Harvest Preparatory Charter School, Hmong 17 1/25/2006 MN 7.000 Miller Johnson Steichen Kinnard NR 1998 2008 7.4 2.9 665 24% 7.47% Na Na Academy), City of Minneapolis Palm Bay Community Charter School - Patriot, 18 4/3/2006 FL 21.100 Gates Capital NR 2006 2009 (0.4) 2.7 0 Na 7.72% 1.10 15.3% Palm Bay City Crescent Academy, 19 12/1/2006 MI 7.090 Herbert J. Sims NR 2004 2007 2.3 0.5 358 11% 6.46% 1.08 14.6% Crescent Academy 97 Appendix E 98 Appendix E

APPENDIX E: DEFAULTED CHARTER SCHOOL BONDS Age at Default from Dated $ Par Lead Initial Year Default Issuance Issuance Enroll- All-In School, Issuer Date State Millions Underwriter Rating Opened Year (Years) (Years) ment Waitlist Cost DSCR Debt Burden Brighton Charter School, 20 12/11/2006 CO 10.195 D.A. Davidson NR 1998 2009 8.3 2.9 216 Na 6.23% Na Na Colorado Educational and Cultural Facilities Authority Challenges, Choices and Images Literacy and Technology Center, 21 4/18/2007 CO 18.430 D.A. Davidson NR 2000 2008 6.6 1.2 319 103% 6.52% Na Na Colorado Educational and Cultural Facilities Authority Academy of Learning and Leadership, 22 4/24/2007 WI 8.650 A.G. Edwards NR 2003 2012 3.6 4.8 264 150% 6.53% 1.28 12.9% Milwaukee City Redevelopment Authority Total/Average 172.620 4.2 4.4 313 54% 7.91% 1.82 13.7% Median 4.6 3.9 247 28% 7.79% 1.53 14.2%

General Methodology & Terminology -- Issues are arranged in chronological ascending order. -P- ar amounts include both taxable and tax-exempt portions of an issuance, as applicable. -- “NR” means not rated. -- “Na” means not available. -- “Enrollment” is student headcount at issuance. -- “Waitlist” is the number of students on the school’s waitlist for the most recent period available at issuance as a percentage of enrollment. -“- All-In Cost” is the overall borrowing cost for the offering, which takes into account the issue’s amortization schedule, interest rates and costs of issuance. -- “DSCR” is net income available for debt service divided by debt service as projected for the fifth or final year of the pro formas (if they had a shorter time horizon). Debt service is defined to include all debt service expense, senior and subordinate, as well as facility leases and other capital lease expenses. -- “Debt Burden” is debt service divided by revenue as projected for the fifth or final year of the pro formas (if they had a shorter time horizon).

A downloadable spreadsheet is available at http://www.lisc.org/effc/bondhistoryv2. PENDIX A p APPENDIX F: PRICING UPDATE Dated $ Par Credit Rating Initial Coupon Exempt Spread to All-In Lead Date State School Issuer Millions Enhancement Agency Rating Type Maturity Coupon Yield MMD Cost COI UD Underwriter

1

1 1/11/2011 CO Highline Academy Charter School Public Finance Authority 8.375 Unenhanced S&P BBB- F 12/15/2040 7.375 7.375 270 7.58% 3.22% 1.92% D.A. Davidson F 2 1/24/2011 1 CO Global Village Academy Public Finance Authority 8.365 Unenhanced S&P BB+ F 12/15/2040 7.500 7.500 256 7.92% 3.99% 2.00% D.A. Davidson 3 2/9/2011 UT George Washington Academy Utah State Charter School Finance Authority 5.890 Unenhanced S&P BB+ F 7/15/2041 8.000 8.000 317 8.62% 5.86% 2.00% Piper Jaffray 4 2/17/2011 AZ Arizona Agribusiness and Equine Center Yavapai County Industrial Development Authority 14.605 Unenhanced S&P BB+ F 3/1/2042 7.875 7.875 293 8.19% 3.76% 1.75% Baird Buffalo and Erie County Industrial Land 5 2/17/2011 NY Enterprise Charter School 7.345 Unenhanced Fitch BBB F 12/1/2040 7.500 7.750 281 8.34% 5.79% 1.50% M&T Securities Development Corporation 6 3/2/2011 DC Cesar Chavez Public Charter Schools District of Columbia 27.21 Unenhanced S&P BBB- F 11/15/2040 7.875 8.000 307 8.10% 3.25% 1.25% PNC 7 3/2/2011 TX Lifeschool of Dallas La Vernia Higher Education Finance Corporation 39.260 Unenhanced S&P BBB- F 8/15/2041 7.500 7.625 280 7.73% 2.83% 1.14% RBC Capital Markets Moody’s Aa3 8 3/17/2011 FL City’s Charter Schools City of Cape Coral 17.69 City Pledge F 7/1/2040 6.000 6.120 142 5.64% 1.11% 0.53% PNC Fitch A+ 9 3/30/2011 NY The Academy Charter School Hempstead Local Development Corporation 10.740 Unenhanced NR NR F 2/1/2041 8.250 8.500 380 9.05% 4.41% 2.14% Siebert Brandford Shank 10 4/6/2011 AZ Park View School Pima County Industrial Development Authority 6.625 Unenhanced NR NR VR 7/1/2041 VR VR VR VR 10.29% 2.75% Lawson Financial Colorado Educational and Cultural Facilities 4/8/2011 2 CO Twin Peaks Charter Academy 2.515 Moral Obligation S&P A F 3/15/2043 6.500 6.500 170 6.75% 3.75% 1.50% D.A. Davidson Authority 11 Colorado Educational and Cultural Facilities 4/8/2011 2 CO Twin Peaks Charter Academy 2.260 Unenhanced S&P BBB- F 3/15/2035 7.500 7.500 282 7.95% 3.75% 1.50% D.A. Davidson Authority 12 4/21/2011 MI Hope Academy Michigan Finance Authority 8.885 Unenhanced Fitch BBB- F 4/1/2041 8.125 8.125 331 8.77% 5.82% 2.00% Baird 13 4/27/2011 MI Holly Academy Michigan Finance Authority 5.750 Unenhanced S&P BBB- F 10/1/2040 8.000 8.000 321 8.44% 5.42% 2.50% Fifth Third Securities Eagle Advantage Schools d/b/a Advantage Newark Cultural Education Facilities Finance 14 4/28/2011 TX 14.23 Unenhanced S&P BBB- F 8/15/2041 8.500 8.500 367 9.16% 4.63% 3.00% Piper Jaffray Academy Corporation 15 5/6/2011 AZ Arizona School for the Arts Phoenix Industrial Development Authority 8.750 Unenhanced NR NR F 7/1/2041 7.750 7.750 325 7.90% 3.54% 1.56% Stifel Nicolaus West Philadelphia Achievement Charter 16 5/6/2011 PA Philadelphia Authority for Industrial Development 7.85 Unenhanced S&P BBB- F 5/1/2041 8.000 8.000 340 8.11% 3.69% 1.50% Janney Elementary School 17 5/10/2011 1 GA Kennesaw Charter School Public Finance Authority 17.450 Unenhanced NR NR F 2/1/2041 8.000 8.088 341 8.07% 3.12% 1.85% D.A. Davidson 18 5/10/2011 UT Summit Academy High School Utah State Charter School Finance Authority 15.93 Unenhanced NR NR F 5/15/2041 8.500 8.500 405 8.66% 2.86% 1.85% D.A. Davidson Charter School, Inc. 19 5/26/2011 DE Kent County, Delaware 3.930 Unenhanced S&P BBB- F 5/1/2037 7.375 7.473 320 8.22% 7.34% 2.25% RBC Capital Markets d/b/a Campus Community School Harmony Schools 20 5/26/2011 TX Houston Higher Education Finance Corporation 58.93 Unenhanced S&P BBB F 5/15/2041 6.875 6.875 257 6.95% 2.10% 1.00% Morgan Keegan (Cosmos Foundation) 21 5/27/2011 TX FOCUS Learning Academy Beasley Higher Education Finance Corporation 9.460 Unenhanced Fitch BBB- F 8/15/2041 7.750 7.750 344 8.27% 7.59% 3.00% Piper Jaffray 22 6/6/2011 MI Summit Academy North Summit Academy North 5.825 Unenhanced S&P BB+ F 5/1/2041 8.000 8.000 370 8.46% 5.57% 2.00% Piper Jaffray 23 6/21/2011 LA Belle Chasse Academy Louisiana Public Facilities Authority 20.725 Unenhanced Fitch BBB F 5/1/2041 6.750 6.790 253 7.03% 3.81% 2.00% Ziegler 24 6/21/2011 1 NC Thomas Jefferson Classical Academy Public Finance Authority 9.99 Unenhanced S&P BBB- F 7/1/2042 7.125 7.200 294 7.47% 3.97% 1.75% RBC Capital Markets California Statewide Communities Development 25 6/22/2011 CA The Rocklin Academy 10.400 Unenhanced S&P BB+ F 6/1/2041 8.250 8.250 402 8.80% 4.96% 2.00% Piper Jaffray Authority 26 6/28/2011 UT Da Vinci Academy of Science and the Arts Utah State Charter School Finance Authority 7.77 Unenhanced S&P BBB- F 3/15/2039 7.750 7.750 354 7.95% 4.03% 1.49% Zions Bank 27 6/30/2011 FL Renaissance Charter School Florida Development Finance Corporation 89.235 Unenhanced Fitch BB+ F 6/15/2041 7.625 7.750 352 7.93% 2.87% 1.88% Ziegler 28 7/13/2011 IL Cambridge Lakes Learning Center Pingree Grove Village 6.4 Unenhanced NR NR F 6/1/2041 8.500 8.500 427 8.71% 2.82% 1.50% William Blair 99 Appendix F 100 Appendix F

APPENDIX F: PRICING UPDATE Dated $ Par Credit Rating Initial Coupon Exempt Spread to All-In Lead Date State School Issuer Millions Enhancement Agency Rating Type Maturity Coupon Yield MMD Cost COI UD Underwriter Animo Inglewood Charter High School California Statewide Communities Development 29 7/20/2011 CA 8.260 Unenhanced Fitch BBB- F 8/1/2041 7.250 7.250 291 8.12% 8.85% 2.00% Baird (Green Dot) Authority 30 8/5/2011 UT Karl G. Maeser Preparatory Academy Utah State Charter School Finance Authority 10.345 Unenhanced S&P BBB- F 6/30/2041 7.500 7.500 315 7.55% 2.15% 1.00% Zions First National Bank 31 8/9/2011 MI Voyageur Academy Michigan Finance Authority 17.935 Unenhanced S&P BB F 7/15/2041 8.000 8.250 390 8.69% 3.99% 2.00% Piper Jaffray California Statewide Communities Development 32 8/25/2011 CA Alliance for College-Ready Public Schools 22.565 Unenhanced Fitch BBB F 7/1/2046 7.000 7.250 347 7.49% 3.95% 2.00% RBC Capital Markets Authority DeKalb Academy of Technology & the Joint Development Authority of DeKalb, Newton 33 8/30/2011 GA 7.215 Unenhanced S&P BBB- F 7/1/2041 7.500 7.500 362 7.86% 5.29% 1.85% D.A. Davidson Environment and Gwinnett Counties 34 9/8/2011 AZ Fountain Hills Charter School Pima County Industrial Development Authority 2.8 Unenhanced NR NR F 7/1/2041 6.650 6.650 283 Na 11.39% 2.75% Lawson Financial 35 9/8/2011 1 OH New Plan Learning Pima County Industrial Development Authority 33.120 Unenhanced Fitch BBB- F 7/1/2041 8.125 8.250 457 8.36% 3.58% 1.45% RBC Capital Markets California Statewide Communities Development 36 9/8/2011 CA Rocketship Four - Mosaic Elementary School 10.115 Unenhanced NR NR F 12/1/2041 8.500 8.500 462 9.19% 5.93% 3.00% De La Rosa Authority 37 10/13/2011 FL Pinellas Preparatory Academy Pinellas County Educational Facilities Authority 8.880 Unenhanced Fitch BBB- F 9/15/2041 7.125 7.125 357 7.52% 4.32% 1.75% PNC 38 10/18/2011 MN Nova Classical Academy St. Paul Housing & Redevelopment Authority 17.54 Unenhanced S&P BBB- F 9/1/2042 6.625 6.650 290 6.83% 3.11% 1.75% Piper Jaffray 39 10/26/2011 IL UNO Charter School Network Illinois Finance Authority 37.505 Unenhanced S&P BBB- F 10/1/2041 7.125 7.125 361 7.43% 3.75% 1.20% Baird 40 11/3/2011 GA Fulton Science Academy Alpharetta Development Authority 18.93 Unenhanced Fitch BBB F 7/1/2041 6.500 6.750 295 6.99% 3.45% 1.50% Merchant Capital BASIS Schools 41 11/8/2011 AZ Florence Industrial Development Authority 7.955 Unenhanced NR NR F 7/1/2041 7.500 7.500 384 Na 3.54% 1.50% RBC Capital Markets (Phoenix) 42 11/8/2011 AZ Harvest Preparatory Academy Pima County Industrial Development Authority 10.5 Unenhanced S&P BBB- F 7/1/2041 6.950 6.950 323 Na 6.96% 2.25% Lawson Financial Texas Public Finance Authority, 43 11/15/2011 TX Orenda Education 4.055 Unenhanced S&P BBB- F 8/15/2041 7.250 7.750 481 8.01% 1.91% 1.91% Piper Jaffray Charter School Finance Corporation 44 11/22/2011 MI Creative Montessori Academy Michigan Finance Authority 4.995 Unenhanced S&P BBB- F 5/1/2031 7.000 7.000 357 7.40% 4.29% 1.75% Fifth Third Securities 45 11/30/2011 FL Bay Area Charter Foundation Florida Development Finance Corporation 37.990 Unenhanced NR NR F 6/15/2042 7.750 7.900 413 8.57% 3.75% 1.88% Ziegler 46 12/8/2011 TX IDEA Public Schools Clifton Higher Education Finance Corporation 26.48 Unenhanced S&P BBB+ F 8/15/2041 5.750 6.000 221 6.12% 2.82% 1.15% Baird 47 12/13/2011 MI Detroit Service Learning Academy Michigan Finance Authority 11.425 Unenhanced S&P BBB- F 10/1/2036 7.000 7.100 336 7.41% 3.96% 2.00% Piper Jaffray 48 12/15/2011 LA Lake Charles Charter Academy Louisiana Public Facilities Authority 15.515 Unenhanced NR NR F 12/15/2041 8.000 8.250 456 8.62% 3.79% 2.00% Ziegler 49 12/16/2011 PA Mariana Bracetti Academy Philadelphia Authority for Industrial Development 24.740 Unenhanced S&P BBB- F 12/15/2041 7.625 7.750 405 7.93% 3.11% 1.75% PNC Colorado Educational and Cultural Facilities 50 12/29/2011 CO Liberty Common Middle High School 5.5 Unenhanced NR NR F 12/15/2015 5.500 5.500 465 6.24% 2.53% 1.00% D.A. Davidson Authority 51 12/29/2011 MN World Learner School City of Chaska 3.415 Unenhanced S&P BB+ F 12/1/2043 8.000 8.000 438 8.66% 6.44% 2.50% Dougherty 1/5/2012 2 AZ American Leadership Academy Pima County Industrial Development Authority 10.975 Unenhanced NR NR F 7/1/2042 7.875 7.900 426 Na 9.01% 2.75% Lawson Financial 52 1/5/2012 2 AZ American Leadership Academy Pima County Industrial Development Authority 0.454 Unenhanced NR NR F Na Na Na Na Na Na Na Na 53 1/19/2012 MI Michigan Technical Academy Michigan Finance Authority 16.130 Unenhanced NR NR F 10/1/2041 7.450 7.450 417 7.66% 3.88% 3.00% Baird 54 1/25/2012 AZ Great Hearts Academies - Veritas Prep Phoenix Industrial Development Authority 16.425 Unenhanced Fitch BBB F 7/1/2047 6.400 6.400 289 6.53% 3.20% 1.83% RBC Capital Markets 55 2/7/2012 AZ Carden Traditional Schools Pima County Industrial Development Authority 16.500 Unenhanced Fitch BBB- F 1/1/2042 7.500 7.625 447 8.02% 4.16% 2.00% Ziegler California Statewide Communities Development 56 2/13/2012 CA Alliance for College-Ready Public Schools 8.455 Unenhanced S&P BBB- F 7/1/2047 6.375 6.375 316 6.99% 7.92% 2.00% RBC Capital Markets Authority 57 2/16/2012 FL Sculptor Charter School Florida Development Finance Corporation 0.720 Unenhanced S&P BBB- F 10/1/2041 7.250 7.250 397 9.06% 16.67% 3.47% FMSbonds APPENDIX F: PRICING UPDATE Dated $ Par Credit Rating Initial Coupon Exempt Spread to All-In Lead Date State School Issuer Millions Enhancement Agency Rating Type Maturity Coupon Yield MMD Cost COI UD Underwriter 58 2/24/2012 AZ Painted Rock Academy Phoenix Industrial Development Authority 10 Unenhanced NR NR F 7/1/2042 7.500 7.500 423 7.74% 3.78% 1.84% RBC Capital Markets Colorado Educational and Cultural Facilities 59 2/29/2012 CO Union Colony Charter School 7.260 Unenhanced NR NR F 3/1/2016 5.650 5.650 Na 6.41% 2.54% 1.20% D.A. Davidson Authority 60 3/15/2012 PA New Foundations School Philadelphia Authority for Industrial Development 14 Unenhanced S&P BB+ F 12/15/2041 6.625 6.625 337 6.94% 4.02% 1.75% PNC 61 3/2/2012 AZ Basis Tucson North Pima County Industrial Development Authority 10.000 Unenhanced NR NR F 7/1/2042 7.550 7.550 432 7.70% 3.21% 1.50% RBC Capital Markets 62 3/6/2012 PA Discovery Charter School Philadelphia Authority for Industrial Development 13.445 Unenhanced S&P BBB- F 4/1/2042 6.250 6.400 313 6.37% 2.97% 1.50% Janney Vista at Entrada School of Performing Arts and 63 3/8/2012 UT Utah State Charter School Finance Authority 13.310 Unenhanced S&P BB+ F 7/15/2042 6.550 6.550 328 6.79% 3.90% 1.00% Ziegler Technology 64 3/29/2012 1 NY Brighter Choice Charter Middle Schools Phoenix Industrial Development Authority 15.14 Unenhanced Fitch BB+ F 7/1/2042 7.500 7.500 408 8.14% 6.29% 1.55% Jefferies Colorado Educational and Cultural Facilities 65 3/30/2012 CO Cherry Creek Academy 3.460 Unenhanced Moody’s Baa2 F 4/1/2030 4.750 4.840 181 5.06% 3.78% 1.40% D.A. Davidson Authority 66 4/2/2012 AZ P.L.C. Charter Schools Pima County Industrial Development Authority 5.73 Unenhanced NR NR F 4/1/2041 7.500 7.500 414 8.29% 8.45% 2.50% Dougherty 67 4/3/2012 TX Ser-Ninos Houston Higher Education Finance Corporation 4.475 Unenhanced S&P BBB- F 8/15/2041 6.000 6.100 283 6.90% 9.47% 1.20% Stifel, Nicolaus Paterson Charter School for Science and 68 4/12/2012 NJ New Jersey Economic Development Authority 11.945 Unenhanced S&P BBB- F 7/1/2044 6.100 6.100 268 6.42% 4.59% 1.53% RBC Capital Markets Technology Colorado Educational and Cultural Facilities 69 4/12/2012 CO Jefferson Academy 15.900 Unenhanced NR NR F 6/15/2017 5.650 5.650 476 6.12% 1.99% 1.15% D.A. Davidson Authority 70 4/19/2012 TX Uplift Education North Texas Education Finance Corporation 80.78 Unenhanced S&P BBB- F 12/1/2047 5.250 5.250 190 5.30% 1.75% 0.94% Baird 71 4/30/2012 MI Concord Academy - Petoskey Michigan Finance Authority 3.040 Unenhanced NR NR F 12/1/2030 6.875 6.875 411 7.45% 5.89% 2.24% Fifth Third Harmony Schools Raymond James/ 72 5/1/2012 TX Houston Higher Education Finance Corporation 31.35 Unenhanced S&P BBB F 2/15/2042 5.000 4.875 163 5.08% 2.90% 1.00% (Cosmos Foundation) Morgan Keegan 73 5/2/2012 ID Idaho Arts Charter School Idaho Housing & Finance Association 2.175 Unenhanced S&P BBB- F 12/1/2042 6.000 6.125 285 6.63% 7.38% 1.66% Baird 74 5/17/2012 UT Salt Lake Arts Academy Utah State Charter School Finance Authority 4.61 Unenhanced S&P BB F 5/15/2042 7.500 7.500 445 7.65% 4.57% 2.00% D.A. Davidson 75 5/31/2012 CA Santa Rosa Academy California Municipal Finance Authority 24.035 Unenhanced S&P BB F 7/1/2042 6.000 6.125 307 6.39% 3.23% 1.50% Ziegler Total/Average 1,140.484 7.174 7.230 341 7.60% 4.67% 1.81%

General Methodology & Terminology -- Issues are arranged in chronological ascending order. -- ”UD” means underwriter’s discount and is calculated as a percentage of the par amount of the offering. -P- ar amounts include both taxable and tax-exempt portions of an issuance, as applicable. -“- All-In Cost” is the overall borrowing cost for the offering, which takes into account the issue’s amortization schedule, -- “NR” means not rated. interest rates and costs of issuance. -- “Na” means not available. Notes -- “Fitch” is Fitch Ratings; “Moody’s” is Moody’s Investors Service; “S&P” is Standard & Poor’s. 1 Bonds issued by an out-of-state issuer. -- In the “Coupon Type” column, “F” means fixed-rate and “VR” means variable-rate. 2 Series is part of a single issue that consists of two series with different ratings and/or disclosure.. -- Data in the “Coupon,” “Yield” and “Spread to MMD” columns is for the longest bond in the offering. -- “COI” means cost of issuance and is calculated as a percentage of the par amount of the offering. A downloadable spreadsheet is available at http://www.lisc.org/effc/bondhistoryv2. 101 Appendix F

October 2012

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